Bitcoin Scams to look out for in 2022

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It is natural for scammers to seep in where there is money. And hence, the entry of scammers and their whole enterprise in cryptocurrency is not surprising. Bitcoin scams sprung up with the inception of the technology itself.

Crypto scams and fraud are comparatively new, but the common ones still use ancient tricks to loot people. Typically, scams of all kinds, crypto scams, or phishing attempts are rooted in a schemer’s potential to gain a victim’s trust. The whole racket relies on gaining a victim’s confidence, and hence they are called con artists. 

Keeping that in mind, let’s look at some common Bitcoin and cryptocurrency scams. Here are things you need to look out for to protect your assets from scams before you start investing in crypto.

Common Bitcoin Scams

Fraudulent cryptocurrency exchanges

Research thoroughly before creating an account with a new or unknown exchange. 

How do we attract prospective crypto investors eager to get in on cryptocurrency? Get them to sign up on a cryptocurrency exchange, a fake one, of course. And then you scam investors out of their money. 

Fraudsters can do it simply by luring crypto investors with the promise of free bitcoin or something on the same lines to get them to sign up for an exchange. Once they have made an initial deposit, victims may realize that the whole thing was a sham and that they have been swindled out of their deposit. 

So, how does one avoid fake exchanges? Stick to the known, established crypto exchanges as the first step. Think things through before creating an account with a new or unfamiliar exchange, and just to be sure, do some research to ensure its above board before you make any move. 

Go to industry sites and newsletters, message boards and forums, and other reputable sources of information to know more about the credentials and reputation of an exchange.

Ico and fake cryptos

ICOs are pretty familiar with IPOs. ICOs are initial coin offerings, and it is the market debut of a new coin or crypto market. And they attract attention, making it an enticing field for scammers. 

An ICO scam typically starts with releasing a fake ICO teaser and asking investors to put in money to get in on it early. Then the money is transacted, and the ICO never occurs, meaning the investors are scammed out of their money and will not get it back.

These scams are so common that the US Securities and Exchange Commission (SEC) published a website to simulate them to lead you to educational tools when you try to invest instead of taking your money.

Do your research before you put any money in a crypto ICO. Research as much as you can about the concerned company from different sources. Educate yourself.

Social engineering scams

The cryptoverse uses the tactics like the old ones to con people out of their cash or personal information. They use hacking, social media scams, phishing, etc.

These scams start out with crypto investors getting an email to update their password or personal information on a crypto exchange; a phishing attempt meant to trick users into providing their credentials. With this information, they then gain access to the investor’s holdings and liquidate them. 

So, check the address of the sender on such emails; if it is full of typos or oddball fonts it is very likely fake. If you can, compare it to the prior emails from the exchange that you are sure that they are crypto exchanges. 

Do not click on any links from the email you received; instead, go directly to your crypto exchange. There, you will know if your passwords really need updating. Be careful on social media too. There are imposter social media accounts that contact you to ask for investments or deposits only with the intention of scamming you.

Trust your gut and not the social media accounts; they are very likely fakes or bots.

Ponzi schemes

Investing always comes with risk and without any guarantee of returns. 

Ponzi schemes are also very similar to pyramid schemes. Simply put, older investors are paid with the proceeds and investments from newer ones. The common scheme in the financial industry found its way to cryptocurrency. 

The government has tried to track down the Ponzi schemes in the crypto community and the ones that use bitcoin to lure in fresh investors. Government regulators track down and prosecute many Ponzi schemes every year, and many of these involve cryptocurrencies.

One very obvious red flag that gives away a Ponzi scheme or any other fraud for that matter is the promise of an investment with no risk and a guarantee of huge profits. No investment is zero risk, and no one can guarantee you returns. 

Pump and Dump bitcoin schemes

A pump and dump scheme is where numerous traders or investors buy an asset that increases its value. When the prices rise, they sell it all off, or you can say they dump it. And the investors who bought in during the initial run-up are stuck underwater.

This scheme entered the cryptocurrency world as well. Government regulators warned of pump and dump schemes being particularly effective in the crypto sphere and warned investors to do their homework before making an investment decision.

To sum it up

Cryptoverse can be pretty risky if you are not sure what you are looking for. It is pretty similar to investing in other assets as well. Where there is wealth, there naturally will be bitcoin scams and frauds. They will try to find a way to get their hands on it.

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