Psst. Want to get rich quickly? There is a new cryptocurrency that will give you an assured return of 1,000% if you invest in it. You will not get this once-in-a-lifetime chance if you wait.
A return like that that is sure to happen could be tempting. But if you see or hear a pitch like that, the only thing you can be sure of is that it is a scam and you will lose your money.
Scammers are taking advantage of people’s desire to make money quickly to trick them into investing in fake cryptocurrency. The Federal Trade Commission says that fraudsters who try to get people to invest with them say they can get buyers big returns quickly and easily. “But those “crypto investments” go right into the wallet of a scammer.”
Scammers not only get people to buy fake crypto investments, but they also talk their victims into giving crypto as payment in a variety of cons, like romance scams. The FTC says that in 2021, nearly 60 times as much money was lost to crypto scams as in 2018. Since January 2021, people have lost more than $1 billion in cryptocurrency, with the average loss being $2,600 per person.
If you have thought about investing in cryptocurrency, make sure you do not fall for a scam. Here’s how to spot Bitcoin scams and stay away from them.
What is Cryptocurrency?
Cryptocurrency is any digital form of money. It is not actual coins or bills that are made or given out by a government or bank. Instead, you can think of cryptocurrency as money that is made online. It can be used to make electronic payments, but most of the time it is sold like stocks and bonds, as an investment.
CoinMarketCap says that there are more than 20,000 cryptocurrencies that can be bought and sold right now. Bitcoin, Ethereum, and Dogecoin are some of the more well-known ones. You can buy cryptocurrencies through online markets like Coinbase, Binance, and Kraken, brokerage platforms like Robinhood, and even digital payment systems like PayPal and Venmo.
When you buy coins, you put them in a digital wallet. Digital wallets are not covered or protected by the government in the same way that bank accounts are. In fact, there are not many rules about cryptocurrencies, which can make it risky to buy them. And, unlike traditional currencies, the value of cryptocurrencies changes all the time and can be very unstable.
Be aware that cryptocurrencies do not have the same rights as debit and credit cards if you use them to pay for things. For example, according to the Federal Trade Commission, you usually can not dispute transactions made with Bitcoin, even if they were made with stolen money. And most deals can not be undone.
How do Cryptocurrency Scams Work?
Most scams involving cryptocurrency happen in one of two ways. Most scams are about investments. Scammers often tell people on social media that they can invest in cryptocurrency and make money quickly. They also send emails, text messages, and phone calls to people who might be interested, promising big payouts with no risks.
Then, the scammers send their victims to websites that look like they are real and where they can invest in cryptocurrency. The sites show users how the value of their investments looks like it is going up, but the FTC says this is a lie.
People are asked to pay fees when they try to cash out, but they never get any of their money back. The FTC says that since the beginning of 2021, people have lost $575 million on these fake purchases.
People also lose money because of cryptocurrency scams when crooks ask for cryptocurrency as payment. This often happens in romance scams, where the scammer starts a relationship with the victim online and then asks for cryptocurrency to help them out financially or offers to help the victim invest in cryptocurrency.
Scammers also pretend to be government agencies, police, energy companies, or other businesses to tell victims they owe money and can pay with cryptocurrency.
How to Stay Away from Bitcoin Scams?
It is hard to keep up with the latest cryptocurrency scams because con artists are always coming up with new stories and ways to get you to give them your money. But there are signs that all of these scams are bad. If you see any of these signs, you will know it is best to stay away.
Legitimate companies and groups do not ask for cryptocurrency as payment. Scammers are the only ones who will tell you that you need to pay this way to fix a legal problem, get your accounts unfrozen, or fix any other problem.
Do not believe people who say you can invest without danger and make a lot of money. All purchases have some risk, but cryptocurrencies have a lot more than most. Plus, no purchase in cryptocurrency is a sure way to make money.
Before investing in cryptocurrency, the FTC suggests searching online for the name of the person or company giving the investment and the words “scam,” “review,” or “complaint.”
Do not click on links in emails, text messages, or social media messages that you did not ask for. Even if the message looks like it came from a company you know or a famous person and says you can make money with crypto, do not click on the link or reply. It is probably a scam.
Be careful if someone you like tells you they can help you invest in crypto, especially if you have never met them in person. Most likely, that “love interest” made friends with you online to use you.
Do not give in to people who offer you free coins. These are all just tricks to get you to give your money away.
Do not pay a job fee in cryptocurrency. Some scammers post fake jobs on job sites or send unsolicited job offers. They then ask for a payment in cryptocurrency to get a job that has something to do with selling cryptocurrency.
They might also offer to give you a check that you can deposit in your bank account and then use to buy cryptocurrency and send to another account. This is also a scam.
How to Report a Bitcoin Scam?
Report it to the FTC at ReportFraud.ftc.gov if someone tries to trick you into a coin scam or if you fall for one. The FTC will tell you what to do next and will give the information you gave them to law officials to help them look into scams. You can also talk to the Internet Crime Complaint Center of the FBI.
If you paid a scammer with cryptocurrency or accidentally gave a scammer access to your digital wallet, you should contact the cryptocurrency exchange you use to let it know about the scam and find out what defenses it has against fraud.
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