Recent events involving Elon Musk demonstrate how volatile bitcoin is. Not surprising, if you think about it. The majority of investors have no understanding of the philosophy or technology behind bitcoin. They only see how early investors turned a few thousand into millions.
The need to duplicate that success only encourages scammers. The lack of regulation by governing bodies makes crypto very private and tempting. This benefit also makes cryptocurrency ripe for fraud.
Here are some of the more obvious ways con artists draw people into their scams.
Fake Bitcoin Exchanges
In one of the most notorious bitcoin scams to date, South Korea uncovered BitKRX. BitKRX claims to be one of the largest trading platforms in the country. Investors flocked to it and never again saw a sign of their money.
To avoid this type of scam, do your due diligence. Always invest with a well-known bitcoin exchange.
In 2019, two con artists got caught in a quarter billion cryptocurrency fraud scheme. Through BitClub Network, they solicited funds from excited investors. In exchange, said investors allegedly received shares in crypto mining pools. Investors also got “rewards” for recruiting investors. No one ever saw any profits.
Many investors are looking for inexpensive options that will one day be worth millions. The next “alternative to bitcoin” seems to pop up every day. My Big Coin promoted a bitcoin that turned out to be nothing but smoke. The con artist behind this company acquired $6 million from investors, directing funds to personal bank accounts before discovery.
Old Skool Scams
It’s a scam as old as the internet: receiving a contact from the “IRS” with a claim you owe money. Many fall for it, sending money, giving access to their bank account, or turning over credit card information, because who wants the IRS targeting them?
Keeping up with the times, fraudsters are playing the same con but with bitcoin. Instead of asking for money, con artists request the transfer of bitcoin.
The only way to avoid this scam is to remember legitimate IRS authorities will not contact you for money through phones or emails saying they’re from a government agency. And they’ll never ask for payment in bitcoin.
Malware requires you to activate a harmful connection. Scammers use software to get access to your virtual wallets and to drain your funds. Malware comes through emails usually. All the hacker needs are for you to click a link or download from social platforms or websites. The link usually comes with a promise of a big reward or free bitcoin.
Never click on a link from an unknown source. Try contacting the company directly or reaching out to a local business agency. If there’s no public info or contact available, you should be leery of engaging.
Bitcoin has become the next big thing in overnight wealth. That volatility increases the chances of falling prey to bitcoin scams. Stick to well-known exchanges with solid reputations and avoid fraudsters promising no risks. Trust your instincts and you’ll avoid bitcoin scams.