The rise of cryptocurrencies has led to a conundrum plaguing the industry: crypto scams. In recent years, scammers have made off with billions of dollars from their victims. With such a massive amount of money stolen worldwide, how are all of these scammers not caught yet? The answers lie within the near-total anonymity of blockchain technology and the relentless pursuit by these scammers to obtain funds. Understanding and identifying a crypto scam can empower you to make more informed decisions about your own crypto investments. So what are the red flags of a crypto scam investment?
Claims of guaranteed profits
Crypto investment scams promise double returns on investment in a short amount of time or claim to have a “special algorithm” guaranteeing profits. There is no way that an investment company can guarantee a specific outcome from your investment with cryptocurrency. Scammers will say almost anything to get you to send them money, and they are relying on the fact that you will not verify their claims and will blindly send them money.
In addition to these grandiose claims, the scammer will push you in an attempt to get you to invest quickly. While it’s a known fact that the cryptocurrency market fluctuates every second, if they’re trying to rush you to invest in their fancy algorithm, it’s a scam.
Social media approach
A common way to get scammed is by being approached on social media. Cryptocurrency investors will typically communicate with potential partners or students through direct or private messages on Instagram, LinkedIn, or other social media platforms. This can be confusing because it seems like there’s a personal relationship between the scammer and the victim when there actually isn’t. If you can access the account of a person asking for money, look for suspicious activity such as a recently created profile with little to no mutual friends and no activity, identifying photos, etc.
Similarly, no professional investment company will contact you through SMS What’s App messages. Professional investment companies will have a very clear and transparent procedure of communication with their clients. If you can’t verify their identity, do not do business with them.
It’s extremely easy for scammers to create fraudulent cryptocurrency investment sites. Falsified platforms often mimic legitimate cryptocurrency sites, sometimes even with names that are nearly identical to genuine sites. If you’re searching for a crypto-investment site on your search engine, be sure to cross-check each and every one of the results you receive. Although some scammers list well-known companies at the top of their search results, others are much sneakier by listing a substandard or nonexistent corporation in place of the real enterprise. Before investing in any platform, do an internet search on the company and confirm that it’s reputable. You can check a website’s credibility using the WHOIS report of that website. The WHOIS report reveals information like the website’s IP address and its registrant, which could help verify whether this is a trustworthy investment opportunity or if you should proceed with caution.
Fake investment or account statements
By using a computer program like Photoshop, scammers can easily create fake account statements to make you believe that your money is being invested properly. Such statements should be analyzed for minor errors that can be easily missed, such as mismatched fonts and sizes, incorrect or misspelled words including the company name, and the amounts listed. If it looks like it could be fake, treat it as such until proven otherwise.
You can’t withdraw your funds
Scammers frequently offer excuses as to why you cannot get your money back. They may say that your profits will increase once more money is invested, that the account manager has been hospitalized in an accident and is not available for contact, or you have to send half for taxes. The fact of the matter is that when they refuse to return your investment or cash you out, they are a scammer.
They’re not licensed with the SEC
Did you know that every U.S. investment company is required to be registered with the Securities and Exchange Commission (SEC)? Certain government agencies, such as the Securities and Exchange Commission, exist in order to protect investors. Before investing in cryptocurrency, check with the SEC if the provider is registered with that agency. If the company is based in the US but not licensed by the SEC, do not invest with them.
If you enter the cryptocurrency market, you must be aware that not everyone has honest intentions. No company can guarantee profits and no one can predict the future. Before investing in cryptocurrency, make sure the company is legitimate. Hopefully, this article provides you with the knowledge you need to make the best investment choice for you.