Crypto scams are a serious issue in the blockchain ecosystem. According to the 2022 Crypto Crime Report Preview by Chainalysis, scammers stole over $7.7 billion worth of cryptocurrency worldwide in 2021. 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. Scammers rely on your ignorance of their slimy tactics. Prove them wrong and empower yourself by learning to identify what a crypto scam looks like and what steps you can take to verify the validity of your crypto investment.
Crypto investment scam red flags
Grandiose claims of profits
The crypto investment company or investor guarantees profits, promises double returns on investment in a short amount of time, or claims to have a “special algorithm” is a scam. There’s no way that a company can 100% guarantee a specific outcome from your investment with cryptocurrency. Scammers will say almost anything to get you to send them money. Keep in mind that this is not an exhaustive list of fraudulent claims made by scammers, but if it seems too good to be true, it probably is.
Communication red flags
How did you first meet this individual? Were you approached on social media? A common tactic is crypto investment scams on Instagram, LinkedIn, and other social media giants. Typically an “investor” (scammer) will contact you with grandiose claims of profits to entice you to invest with them using their crypto investment strategy. In reality, a legitimate crypto investor looking for “partners” or “students” isn’t going to slide into your DMs. If you have access to their social media accounts, scan their profile for suspicious activity such as a recently created profile with little to no mutual friends, no activity, no identifying photos or consistently identifying photos, etc. Scammers are constantly creating new fake social media accounts to continue the cycle of the scam.
Fake account statements
In today’s digital world you can create almost anything on a computer and pass it off as the real thing. By using tools like photoshop, scammers can easily create fake account statements to make you believe that your money is being invested properly. Analyze the documents for minor errors that can easily be 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.
How to verify if a crypto investment platform is a scam
Ask to withdraw your money
Don’t withdraw all of your money at once, this may tip off the scammer that you’re onto them. Ask to withdraw a small amount and take note of their reaction. Oftentimes scammers will make up reasons as to why your money can’t be returned. Scammers may claim that once you reach a certain amount invested, your account will be upgraded and your profits will be larger. Others may claim that the account manager is sick or unavailable to be contacted. Ultimately, if they refuse to send your investment back, they’re a scam.
Research the company
Similar to creating fake account statements, it’s also extremely easy for scammers to create fake crypto investment websites. Oftentimes they look and behave like legitimate websites, sometimes even with names almost identical to legitimate crypto platforms. Unfortunately, once you sign up for one of these fake websites and invest your money, the scammers are one step ahead. Before investing, research the company in a simple google search. Has this individual or company been accused of fraud previously? Is there any information even available on the company? You can also check the WHOIS report of a website using the URL of the site. The WHOIS tells you the IP address of the website, the registrant, and other important information that could help you better understand who you’re investing with.
Check the Securities and Exchange Commission
Did you know that in the U.S. every investment company is supposed to be registered with the Securities and Exchange Commission (SEC)? Government agencies such as the SEC are dedicated to providing protection to individuals and their investments. Check with the SEC before investing in cryptocurrency.
No company can guarantee enormous profits or even results at all, not even the top Wall Street traders. If it seems too good to be true, it probably is. If you’ve been a victim of a crypto scam, you can report your experience to the FTC. Looking for a list of crypto scams? Check out this article from Scam News Channel of crypto scam companies in 2021. Empowering yourself with knowledge is the best way to keep yourself and others safe from online investment scams and crypto scams.