Cryptoscams

Have you ever thought about investing in cryptocurrencies or even using it to buy things online? We have some top tips to keep you safe.

It’s important to remember firstly, that when buying cryptocurrency, it’s an investment. And as with any investment, the value of it could go up or down. Of course, you could be looking at what is known as a stablecoin which are usually linked to the value of the US dollar or other similar stable currency. These are much less likely to fluctuate, but it’s still an investment, and as with any investment you can lose money.

This doesn’t mean that cryptocurrency is inherently a scam or that cryptocurrency is a bad thing, which is a common misconception and it can be a great tool if used correctly. However, there are plenty of scams out there that involve cryptocurrency.

First, I will explain a little about how cryptocurrency works. All crypto transactions appear permanently on a digital purchase ledger called the blockchain. The blockchain is a decentralised purchase ledger that is kept in many places all around the planet. The ledger stores encrypted transaction information that is “confirmed” by everyone on the network. This makes crypto largely tamperproof which is why it’s so popular.

Mining cryptocurrency is a process where a computer is used to solve complex mathematical equations to both confirm the blockchain (purchase ledger) and create new coins. The first computer to solve the equation is rewarded with the coins. Unfortunately, this uses large amounts of both computing power and electricity so this is not the typical way most people gain cryptocurrency, especially newcomers.

So now you know how it works, let’s take a look at some of the common crypto scams you might encounter.

Cryptocurrency Promotion

Fraudsters will cold call, send phishing emails and post on social media promoting “get rich quick” investments in cryptocurrencies such as bitcoin. The fraudsters will try to persuade you to sign up to investment sites and enter personal information and card details. Once you’ve made your initial deposit, they will keep contacting you to persuade you to invest more. Often, becoming more and more aggressive if you refuse.

By the time you realise something is wrong, the website has disappeared and your investment is gone.

How can you protect yourself from this?

  • Don’t assume it’s real. Professional looking websites and social media posts don’t always mean the investment opportunity is real. They will often mimic legitimate exchanges and other well-known brands.

  • Don’t be rushed into making a decision. A genuine bank or financial organisation won’t rush you into deciding what to do. Also, be wary if you are pressured into investing quickly or the returns are too big to be true.

  • Stay in control – avoid uninvited offers. If you’re thinking about making an investment, get independent advice and thoroughly research the company first.

  • Report any emails to the NCSC’s Phishing email service by forwarding it to report@phishing.gov.uk and if you have become a victim, contact your bank and report it to Action Fraud. You can find out how to do this on our contact us page.

Giveaway Scams

Scammers are using social media to promote giveaway scams. They will post screenshots of forged messages from well-known companies or executives with links to a cryptocurrency giveaway. Fake accounts will respond to these posts confirming them as legitimate. They will ask that you send some of your cryptocurrency to them “to verify your wallet address”. Often, once you have made the payment they will become uncontactable.

How can you protect yourself from this? 

  • Never send money or cryptocurrency to another person to verify anything, this includes verifying your address. 

  • Be cautious of all giveaways on social media 

  • Use your favourite search engine to do some research before committing to anything 

  • Report any emails to the NCSC’s Phishing email service by forwarding it to report@phishing.gov.uk and if you have become a victim, contact your bank and report it to Action Fraud. You can find out how to do this on our contact us page. 

 
New Coin Scams 

You may have heard about people putting money into coins like Bitcoin 5-10 years ago and now having huge returns. You might think you won’t make any money on Bitcoin as it’s so high in value now. An influencer you follow on social media suggests investing in new coins instead.  

You might be told things like “your investing in a new coin from the start, you can’t lose money” or “You can triple your money in just a few weeks”. Sound familiar? You are probably dealing with a fake coin broker.  

Not all cryptocurrency projects/coins are legitimate. Some are setup with the sole purpose of extracting money from you.  

How can you protect yourself from this? 

  • Use your favourite search engine to do a bit of research on the coin broker and coin you are looking to invest in 

  • Be cautious of anyone that approaches you with offers of high returns 

  • Only use well known exchanges or brokers for your investments. They will only list legitimate coins. 

  • As always, report any emails to the NCSC’s Phishing email service by forwarding it to report@phishing.gov.uk and if you have become a victim, contact your bank and report it to Action Fraud. You can find out how to do this on our contact us page. 

 

There are many more scams out there designed to steal either money or your cryptocurrency from you. I have talked about a few common ones, but with the advice listed above, you should be able to steer clear and invest safely should you wish to.