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.

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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.

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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.

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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.

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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.

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

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Cryptocurrency Promotion

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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.

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

How can you protect yourself from this?

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• 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.

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Giveaway Scams

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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.