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:
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.
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 in turn allows the victims to believe the scam tokens are real or legitimate. This, therefore, inspires confidence in the victim to exchange real money or cryptocurrency for these ‘spoof tokens’.
When you are looking to buy cryptocurrency and tokens, it is vital that you ensure that you are directed to the correct address for the exchange. Verify before you transact.
Sleep Minting NFTs
Over the last few years, NFTs or Non-Fungible Tokens have become a popular form of cryptocurrency.
Sleep minting is an advanced process that makes it possible for scammers and criminals to make NFTs that appear to be linked to, and created by, well-known personalities. Much like art fraud, these scammers aim to obfuscate the true origin of the NFT with the aim of selling that NFT for a larger amount.
It is important to do as much research into an NFT before purchasing it to help you ensure the providence 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 that you protect these well. The seed phrase or key is what allows you to unlock the funds in your crypto wallet and just like your bank pin, you really shouldn’t share this with anyone.
Make sure you keep your passwords, pin codes and seed phrases safe, encrypted and varied. Change these often to help ensure that hackers cannot gain access to your accounts.
Unlike a traditional ATM, crypto ATMs are not well regulated and generally not easily available. This lack of availability may however be better as scammers have been known to hack into these ATMs. When they do, they send fraudulent QR codes which send the unsuspecting victim’s cryptocurrency to the incorrect account.
When visiting a crypto ATM be sure to investigate the legitimacy of the ATM brand. If you are unsure if the ATM is the real deal, rather transact safely on your preferred cryptocurrency exchange/website.
Finally, like any monetary system, scammers are going to try and get your personal information. Phishing is one of the most traditionally used scams out there. The scammers send fake emails and websites (that look convincingly correct) to their potential victims in order to get them to enter sensitive information.
Once a victim enters the information required the scammers use the information to access the person’s real crypto account and ultimately steal all their cryptocurrency.
It is important that you never respond to phishing emails and messages. Rather log in independently or call the company to verify information following alarming messages.
Keeping your Crypto Safe
While not every person is a crypto expert, some of the simplest ways to keep your crypto safe are the same as your ‘traditional’ money.
Ensure that you only use verified and trusted sites for crypto exchanges and transfers. Just like you wouldn’t log into a slightly different bank website, the same rule applies to crypto websites.
Try to limit your crypto investments to mainstream investments and assets as these tend to be more reliable and there are more sources of information and advice.
If you receive emails that are alarming, treat them as a scam. Do not respond to such emails, rather call the company to verify the information you have received.
As with most things, it is important to live by the age-old advice: if it seems too good to be true, it probably is.