How to avoid scams
It can be tough to seek out fraudulent sites and deals. For instance, the cryptocurrency exchange Binance had to shut down for two days after hackers posted an encrypted ransom note demanding a $7.4 million ransom in exchange for access to the website. All the coins were safely returned in exchange for Bitcoin, but that was a reminder that you can never be too cautious.
“When it comes to cryptocurrency scams, there are many online and offline methods,” warns Coinbases’ Clifton. “Be sure to double check all information before making a decision and always make sure your site or crypto company is legitimate.”
The bottom line
“You shouldn’t put too much trust into any investment,” says Clayton. “If you have been scammed, please report it to the FBI at the website https://www.ic3.gov.
A newbie’s guide to crypto scams
Cryptocurrencies and the tech community are making inroads into the mainstream. Last year, more than 1,500 ATMs began accepting the digital currency bitcoin, a significant accomplishment.
If you want to jump on the cryptocurrency bandwagon, you’ll need a stable of coins to trade with. Finding these coins can be difficult. Experts advise caution, even if an offer seems too good to be true.
If you’re on a bitcoin buying spree, let these cryptocurrency scams steer you away from counterfeiters.
Fraud is a widespread problem in the crypto world, but it isn’t limited to scams involving cryptocurrency and cryptocurrency wallets. Others involve cryptocurrencies and virtual games such as the controversial “Sim Money,” which supposedly pays users for gameplay.
How to spot a cryptocurrency scam
If a website you’re visiting appears to be a scam, you may be blocked from viewing it. To determine if a website is legitimate, look for the “https” icon in the URL bar. This is a security measure that lets you see that a website is using a secure connection to protect your information.
Other signs include:
- No web history.
- Visiting a website means that you’re taking a risk. It may be a scam site, as the bad guys may have recorded all your visits.
- No phone number or email address listed.
If a company doesn’t have a web presence and its website isn’t being updated, then it probably isn’t legitimate.
Don’t be afraid to walk away if a company you’re researching uses something like phishing techniques or doesn’t provide the necessary information.
Common crypto scams
In the wake of an increase in scam activity, regulators have teamed up to take down illegal cryptocurrency and ICO activity.
According to the Canadian Securities Administrators, “an investment product must meet certain criteria in order to be considered an investment.”
There are three main categories of products that you should be on the lookout for. They are securities, which are investments where the potential return is based on the outcome of an event. They are warrants, which are similar to options, and trust deeds, which are complicated agreements made between people and often grant other people rights to what you own. Cryptocurrencies don’t fall into any of these categories.