The Top 7 Cryptocurrency Scams to Watch Out for in 2023

October 30, 2023

By Anjali Kochhar

In the rapidly evolving world of cryptocurrency, staying one step ahead of potential threats is paramount. Where money is concerned, it is important to stay alert and on top of the new scams happening so one can protect their assets. With changing times, scammers are upgrading themselves and constantly searching for new ways to deceive people and scam money. The cryptocurrency market is still new and highly unregulated, making it the perfect mode for scammers to operate through.

Cryptocurrency transactions occur within a digital framework, rendering them inherently digital tasks. This means that they are typically irreversible, meaning that once your funds are sent to a scammer, there’s no way to get them back. Digital money typically represents a digital representation of a fiat currency and often relies on traditional financial institutions. So, digital wallet holders have the flexibility to convert their digital currency into traditional cash by initiating a transfer to their bank accounts. In contrast, cryptocurrencies, powered by blockchain technology, operate independently of such intermediaries. Once a transaction is confirmed on the blockchain, it cannot be undone. This means that if your Bitcoin is stolen and sent to another address, it’s nearly impossible to reverse the transaction.

In order to stay ahead of the game and protect your cryptocurrency, watch out for these scams that have emerged in 2023:

1、Rug Pull Scam

A rug pull scam involved scammers trying to promote a new cryptocurrency, trying to jack up its prices. The scammers try to get investors to invest money as seed money for the new cryptocurrency project that appears legitimate, enticing investors with the promise of significant returns. The scammers may present convincing documentation, build a strong online presence, and even encourage others to invest or provide liquidity to the project.

Once a substantial amount of cryptocurrency is invested or locked into the project, the scammers execute a “rug pull.” This means they suddenly and deliberately abandon the project, causing its value to plummet. As a result, the investors are left with a valueless investment and suffer from huge financial losses.

One of the most common examples of this scam is the Squid crypto, which gained popularity after the famous show.

2、Fake Job Scams

With the technological advancement and integration of technology in every sector, there has been a rise of interest for jobs within the Web3 space. The scammers are using this interest to gain personal information and crypto payments from people. First, fraudsters may pose as representatives of well-known cryptocurrency companies, luring victims with job offers that promise substantial salaries, flexible work arrangements, and enticing benefits. They may even provide counterfeit employment contracts and request personal information or fees for background checks and training materials.

Once the victim pays these fees or discloses personal information, the scammers disappear, leaving individuals without jobs or the promised returns. To avoid falling prey to such scams, job seekers should research potential employers, validate the authenticity of job offers, and exercise caution when asked for personal or financial information before joining a cryptocurrency-related position.

3、Romance Scams

This is one of the most cruel scams thus far. Post the pandemic and with integration of digitization, social interactions with strangers who one meets online has increased. Additionally, more people are signing up for dating websites than ever before. Within this scam, fraudsters create fake profiles on dating websites or apps and usually use fake photos. They build trust with their match by texting them and talking to them regularly. Once they build trust, they start talking about investments in crypto and its advantages, even offering the victims help to start investing, enticing them with very high returns.

Once the victim either transfers the money or the cryptocurrency, the scammers flee and the victim is left with heavy financial losses and heartbreak.

4、Celebrity Endorsement Scams

Periodically, scammers employ the tactic of impersonating celebrities to boost the interest in certain cryptocurrencies. Within this year, there have been reports of scammers impersonating Elon Musk or Ryan Selkis and giving advice on buying a new currency or backing a certain cryptocurrency. They entice unsuspecting individuals to invest in their new cryptocurrency, often promising astronomical returns. This leads to market manipulation and can turn into a rug pull. Alternatively, they can also ask the individuals to transfer them certain cryptocurrency assets in form of payments for advice on the market. Once they receive the funds, the fraudsters vanish into the digital abyss, leaving victims to realize they’ve fallen victim to an elaborate hoax.

5、Phishing Scams

Phishing is one of the most common type of online scam. Phishing scams are deceptive schemes where scammers create fake websites and send fraudulent emails to unsuspecting individuals. These fraudulent platforms often mimic legitimate cryptocurrency exchanges or wallets, aiming to trick users into disclosing their private keys, login credentials, or personal information. Once obtained, scammers can access victims’ cryptocurrency holdings and steal their funds. The main objective of these scams is to steal user information, such as credit card numbers and login credentials so they can steal the money.

6、Fake Exchanges and Fake Websites

A frequent scam involving cryptocurrency involves using phony wallets, applications, exchanges, or other platforms to siphon off customer funds. Often, in these types of scams, the fraudsters will entice the victims with lucrative exchanges, ensuring the return is higher for the victims. These websites and apps are built to steal the information of the victim. Once they gain access to their data, the scammers can then use legitimate websites to steal the data.

Alternatively, the scammers may create a fake website specifically designed to steal data and money. These websites may seem to work in the beginning, allowing the investor to buy currencies and trade. However, they are fake and once the victims invest more money, the websites are designed to steal that money and will stop working.

To protect yourself from fake exchange scams, always exercise caution and due diligence. Verify the authenticity of an exchange, and ensure to only use legit apps and websites to trade with cryptocurrency.

7、Ponzi Schemes

Ponzi schemes are also another common scam. These are fraudulent investment schemes that promise high and consistent returns to investors. New investors are lured in with the promise of bitcoin or a new promising currency. The scammers pay the returns using the capital of new investors, creating an illusion of profitability. As the scheme grows, it becomes unsustainable, leading to a collapse that leaves many investors with substantial financial losses. Ponzi schemes often lack legitimate business operations, and their success relies solely on recruiting new participants.

Bottom Line

In the ever-evolving realm of cryptocurrency, it is vital to be aware of the kind of scams happening. The kind and volume of scams pertaining to the cryptocurrency sector have increased along with its growing popularity. Although the rules governing each cryptocurrency scam vary, their common goal is to trick gullible investors and embezzle their money. This is why it is important for cryptocurrency users to be vigilant and safeguard their investments and assets. This can be done by staying informed about the latest scams and exercising caution, diligence, and skepticism.

About the author

Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.

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