Five Top Crypto Scams in the First Half of 2022

Most people realize that cryptocurrency involves significant risks. We’ve witnessed a recent spectacular dive in bitcoin price. In addition to volatility of digital currencies, the number of crypto scams continues to grow, robbing consumers of billions of dollars already in 2022 so far. 

Looking at the cryptocurrency market at the mid-year point, it’s clear that 2022 has been a wild ride for digital currencies. The rapid rise and fall of cryptocurrencies has been an obsession of the financial press. However, even if digital currencies held their value and were steady investments, crypto frauds would still be a major problem. 

Why Are There So Many Crypto Frauds?

One reason for the large number of crypto frauds is that digital currencies are still new. Most consumers aren’t really sure how cryptocurrencies or the blockchain work, but they don’t want to miss out on a financial opportunity. They may leap before they look and buy and trade cryptocurrencies without knowing how to be careful. 

Another reason for the proliferation of crypto frauds is the ease of hiding in the blockchain. Meanwhile, law enforcement and other authorities still need to upgrade their cyber crime departments to deal with the crisis. 

Cyber criminals think they can conceal their activities using the anonymity of the blockchain as a cover. Even though KoinTrail can find them, the assumption that the blockchain is the Wild, Wild West without a sheriff inspires many fraudsters. 

What Are the Top Crypto Scams So Far in 2022? 

Although any type of fraud, with the addition of crypto transactions, can be transformed into a crypto scam, the following top the list of most common types. 

  • Fake Crypto Investments

It’s amazing how easy it is for an unlicensed individual or group of cyber criminals to call themselves brokers and advertise their crypto trading services. Equally amazing is how quickly people are willing to part with their money on the faith that an unregulated entity is legitimate and can generate returns on their investment. These operations either offer crypto trading or demand that accounts are funded only with cryptocurrency. Either way, people who hope to trade with them not only see no returns, but lose their principal. 

  • Rug Pull Scams

Rug pull scams are exactly what they sound like–they promise something crypto-related and then pull the rug from under victims at the last minute. A more vivid image may be Lucy pulling the football from Charlie Brown when he attempts to kick it, but the principle is the same. 

The most famous example of the rug pull scam was the Squid Game crypto deal. Participants bought tokens to play games that would award them more tokens if they won. They were told they could trade these tokens in for cryptocurrency. Suddenly, the operation stopped and the tokens were worthless. Players were left with only the tokens and the scam made off with their money. 

  • Social Media Crypto Scams

Social media is ground zero for crypto scams. It’s easier to masquerade as another person on Facebook or Instagram and to disappear without an official website. Recently, Richard Branson has complained that his name, image and brand is being used to push fake crypto deals and he cautions people to ignore anything being marketed in his name, except his own products. 

Scammers on social media aren’t just using celebrity names and photos, but meet people for friendship and romance only to ask them for a loan in cryptocurrencies or offer a fake trading deal. Be careful who you deal with on social media, and don’t give them any money! 

  • Phishing Scams

Phishing is any attempt to take sensitive information from someone else under false pretenses. People do this either stealthily, which is known as hacking or by getting or “phishing” the information from the person with their knowledge. In crypto phishing scams, someone pretending to be a broker, an organization or a merchant will ask for sensitive data, including crypto codes or crypto wallet information only to rob you of your cryptocurrency. 

  • Fake Crypto Exchanges

You wouldn’t put your money in the bank without finding out if it is actually regulated and a legitimate entity. That’s why people often like working with banks that have been around for a while and have a solid reputation. Crypto is relatively new, and no exchanges have been around for decades, but stil, it’s important to research an exchange well before using it. Often, you are safer dealing with familiar exchanges and those that are regulated rather than taking a chance on something brand new but without a license. 

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40 billion dollars in cryptocurrency scams this year alone!

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