Whether you are looking to invest a couple hundred Rand or a much larger amount, cryptocurrency can seem like a great way to make some quick money. While there are a wide variety of different crypto options available for you to investigate, there are an equal number of crypto scams out there looking to dupe you out of your money with no intention of providing a return.

Like most scams out there, crypto scams often use socially engineered schemes rather than any deep technical knowledge of crypto and the different platforms. Ultimately these scams share many features with non-crypto scams such as Ponzi schemes, ‘rug-pull scams’ and others. The intent is to build the trust of the victim and confidence in the scammer, resulting in the victim paying crypto into the scammer’s account—or to get them to buy into a crypto product that’s designed to enrich only the founders.

While these ‘traditional’ scams form the vast majority of crypto scams, there are a few that do require and make use of deeper technical knowledge. Here is what you should look out for:

Fake Apps

There are many apps available for cryptocurrency and like all the apps out there you are bound to come across one or two fraudulent apps. These fake apps are created by individuals who have knowledge and experience programming for different operating systems. They are also responsible for defrauding victims of around R800 million this year alone.

A way to avoid this is to ensure that you only download trusted and well-known apps.

Token Spoofing

This is an advanced form of crypto fraud. Token spoofing uses malicious smart contracts, which is a type of blockchain coding that runs when specified conditions are met for the exchange of crypto tokens to occur. Scammers program the address of a well-known and popular token creator into their ‘smart contract’ code despite their code not being associated with it.

This allows victims to believe the scam tokens are real or legitimate, inspiring confidence in the victim to exchange real money or cryptocurrency for these ‘spoof tokens’. Always verify the correct address for exchanges before transacting.

Sleep Minting NFTs

Over the last few years, NFTs (Non-Fungible Tokens) have become a popular form of cryptocurrency. Sleep minting is an advanced process that makes it possible for scammers to create NFTs that appear to be linked to well-known personalities. Much like art fraud, these scammers aim to obfuscate the true origin of the NFT with the aim of selling it for a larger amount.

It is important to do thorough research into an NFT before purchasing to ensure the provenance of the NFT.

Poor Key Security

Whether you are using a traditional password or a seed phrase (a phrase made up of several words that act similarly to a password or key) it is vital to protect these. The seed phrase or key allows you to unlock funds in your crypto wallet. Just like your bank PIN, you shouldn’t share this with anyone.

Keep passwords, PIN codes, and seed phrases safe, encrypted, and varied. Change them often to prevent hackers from gaining access to your accounts.

Crypto ATMs

Unlike traditional ATMs, crypto ATMs are not well-regulated and generally not widely available. Scammers have been known to hack these ATMs and send fraudulent QR codes, redirecting the cryptocurrency to the wrong account. Always verify the legitimacy of a crypto ATM brand before using it. When unsure, use trusted crypto exchanges or websites.

Phishing

Scammers often attempt to gain your personal information. Phishing is one of the most common methods. Scammers send fake emails or websites that appear legitimate to trick victims into entering sensitive information. This information is then used to access crypto accounts and steal cryptocurrency.

Never respond to phishing emails. Instead, log in independently or call the company to verify alarming messages.

Keeping Your Crypto Safe

While not everyone is a crypto expert, some of the simplest ways to keep your crypto safe are similar to traditional money security:

• Only use verified and trusted sites for crypto exchanges and transfers.
• Limit investments to mainstream assets, which tend to be more reliable.
• Treat alarming emails or messages as potential scams and verify independently.

As with most things, follow the age-old advice: if it seems too good to be true, it probably is.