Crypto Scams – How to Avoid and What to Do When You Are a Victim of Cryptocurrency Frauds?

In recent times the world has seen a significant rise in the popularity of cryptocurrencies. Whooping investments in cryptocurrencies have shot the prices of cryptocurrencies to the sky. But along with the hike in prices of cryptocurrencies, the graph of cryptocurrency scams has also shown significant growth. A study shows that US citizens have lost more than $80 million in 7 months from October 2020 to April 2021.

The Federal Trade Commission of the US has reported that more than 7,000 investors have reported losses this year. The numbers are 12 times higher than last year. The estimated average loss per investor is approximately $1900. The investors between the age group of 20-30 years have lost the most amount of money. Most of the losses incurred by this age group are due to cryptocurrency scams.

You can get the services of cyber investigating companies which assist the victims on how to get bitcoin back from a scammer?

Why Do Investors of Cryptocurrencies Lose?

The current market conditions are ideal for scammers, and here are some of the reasons behind them.

  • Lesser Knowledge of Cryptocurrency – The evolving market has a maximum number of investors with less knowledge. It is an ideal situation for scammers to choose the easiest prey among the many available. The cryptocurrency market is still growing, and there is a knowledge gap between fraudsters and investors. The continuous flow of investors keeps the current on, and the scammers keep taking advantage of unsuspecting new investors.
  • Massive Price Hike – We all saw a considerable surge in the prices of cryptocurrency at the beginning of this year. The frequent headlines mentioning stories of crypto millionaires added to the people’s interest. The expectation of earning huge profits and fear of being left behind are the two factors that have increased the inflow of new investors. Massive returns on nominal investment have made cryptocurrencies a favorite investment tool.
  • The Lesser Emphasis on Protecting Consumers Interest – The stock markets around the world follow certain rules and regulations. It safeguards the interest of investors, stockbrokers, and companies registered with them. However, in crypto, the investor cannot even differentiate between real and fake companies.       

How To Avoid Cryptocurrency Scams

The easiest way to evade cryptocurrency scams is to consider it a common investment, just like a mutual fund or similar purchase. Crypto as a prefix is not a guarantee of anything becoming the magical wealth gainer.

Scammers set up numerous ways to embezzle your money. They set up bogus cryptocurrency exchanges on digital platforms to attract investors. Once the investors get registered and transfer the money, they find themselves in trouble, unable to withdraw it anymore. A similar type of scam is pump and dump. Here, the scammer encourages fake coins to push up the prices, finally cashing it out before it becomes zero.

Here are some techniques to save you from becoming a victim of these frauds.

1. Do Thorough Research

Take time to understand the cryptocurrency you wish to buy. Look what the management team is promising regarding crypto. See where the company is based and their competitive environment. It is advisable to do your due diligence on the broker or exchange you plan to transact with.

2. Choosing a Reliable Broker, Exchange, or Platform

Out of the hundreds of cryptocurrency exchanges, only a few have the licenses to carry on their operations in the US. If the exchange promises you to pay interest on coins, you must learn where that interest will come from? Whether the cryptocurrency exchange is lending or staking the coins to pay the rewards.

3. Celebrity Endorsements

Some celebrities endorsing cryptocurrencies are under suspicion. You cannot make out whether or not it is a paid promotion. A report from FTC says that impersonators of Ellon Musk have received over $2 million in the last six to seven months from people to promote their cryptocurrencies.

4. Never Share Your Cryptocurrency Keys or Password with Anyone

Just like you do not share your bank PIN or any financial password with any stranger, you must never share a cryptocurrency key with anyone. A cryptocurrency key is a code only you should access.

Here’s What You Should Be Doing If You Are Scammed

It is the worst feeling to realize that you have fallen prey to a scammer. But the data available shows that you are not the only one. The fraudsters have created many sophisticated customs to steal or forfeit your hard-earned money. Although it is difficult to recover the losses from these scams, it is not impossible to do so. The following steps can help you out in recovering your lost money:

  • Contact your cryptocurrency exchange or the bank as soon as you realize that you are scammed. You can reverse the transaction if you convince them that the deal was deceitful. Remember, it is only possible if you have made the payments using a credit or debit card.
  • It is necessary to protect your identity. Report to the authorities and freeze your financial accounts if you have shared your cryptocurrency data with anyone. The earlier you begin the action; the more are the chances of recovery.
  • You can hire the services of a cyber investigator. The service provider can help to track down the lost funds. In some cases, they offer free assistance to the victims.

We expect a rise in consumer protection law as the general acceptance of cryptocurrencies grows. Meanwhile, you have to remain safe with your money, not allowing any scammer to treat you as easy prey.

Stay Safe, and Intact

There are numerous platforms all over the world waiting for you. They provide access to hundreds and thousands of cryptocurrencies. It is you who decides which platform offers the most material features for you. Choosing a reliable platform to buy and sell is very important.

Go through the reviews available before choosing a platform for yourself. You can also talk to experts in the field before investing your money in cryptocurrencies.

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