How to stay away from crypto scammers

December 19, 2022

Crypto space is increasing with newcomers day by day. Some try to understand how blockchain works, while others just want to invest in cryptocurrencies. Even if both technology and digital assets have a huge potential in changing the world we know today, there is a soft spot in this ecosystem, especially for newbies. Take a guess?

Oh yes, that’s right! We’re talking about the scammers! But how can they affect people’s journey into the crypto space, especially in the beginning? Let’s dive in! 👇🏼

New to the crypto space?

First things first! From the outside, the crypto space might not look so good for everyone, especially in a bear market. There are people who don’t understand the importance of the crypto world and the potential of blockchain technology. Yet, from a biased point of view, they argue that crypto is nothing but a scam. Fortunately, it’s not true.

So we’re here to clear that up.

If you’re new to crypto, we know you may feel overwhelmed. It’s quite true what they say: do your own research (DYOR). But there is a lot of info to assimilate: terms, strategies, recommendations, and a lot of articles you can lose yourself in trying to catch up with everything.

Also, the crypto space looked quite grim lately, with the early November FTX collapse being on top and negatively impacting a lot of other industry actors. This crisis came in an already unstable and bad-looking macroeconomic environment, so it only accelerated the fall. But what we want to convey at this point is this: no matter how the entire industry may look at a specific moment, you should always have crypto conduct, discipline, and cautiousness.

We won’t give you any financial advice, and we won’t talk about investing or trading. We’re here to show you the most common types of scammers and how to stay away from them, no matter what project you’re involved in.

Not to mention that we strongly advise you to own a non-custodial wallet and to take full responsibility for your digital assets. This, of course, implies not sharing your seed phrase with anyone.

Ok, now that we have cleared that up straight from the beginning, we can go deeper. Let’s see the most common scams and how to avoid them!

The Most Common Scams

People are creative, we can be sure of that. Scammers are not far, either. Nowadays, there are quite a several ways of scamming people in the crypto space, especially beginners. And that’s not because there is something wrong with the latter, but because there is quite little known in the crypto space, yet. Scammers give high hopes, especially for winning great amounts of money. Their offers are certainly tempting. So, let’s see below the most common scams and red flags you should know about.

🚩 Impersonating

Scammers create fake social media accounts pretending to be important public figures, community moderators, admins, or members of some project teams. After that, they send private messages with all kinds of promises. It’s easier for people to fall into the trap when they see a message from a known public figure, not thinking they are actually scammers. Admins or members of teams will never ever contact people by private messages first.

🚩 Investment schemes & Fake Giveaways

Whether the scammers impersonate a public figure or not, they promise big wins after you make a payment in advance or pay an upfront fee. After that, they steal the money and you’ll never hear from them again. This is one of the most common types of scams.

Also, unusual drops or giveaways are scams. If they request from you a payment in advance in order to be able to participate, be sure it’s a scam. It’s also a very common practice for scammers to promise to multiply your investment. Other scammers frequently rush to comment that they already participated in this way and won a huge amount of money. Just remember this: no one will multiply your investment and give it to you, no matter how convincing they seem to be! 

🚩 Rug pull schemes

When it looks so good to be true, it’s usually NOT. 🙂 In this type of scam, the creators pump a new project, coin, token, or NFT with a lot of publicity. After getting enough investors, they exchange the cryptocurrencies into fiat and eventually run away with the money. One of the most known rug pulls was the Squid coin scam. 

🚩 Pump and Dump (P&D) schemes

The fraudsters create FOMO on a particular project or coin, even if this is an obscure one. They can associate with some “influencers” who live luxurious lives and sell an image of a life that you could also have if you invest in their project. 

Their goal is to build a big community that can invest in a particular coin, only mentioned at specific moments. The members are invited to invest fast and as much as they can, while the coin is at a low price. After the coin will artificially be pumped and reach high value, the community could sell the coin and get a “beautiful profit”. The moderators of this scheme orchestrate the moments when people can buy and sell the coin. But of course, only a few manage to sell at high prices within a few seconds, and they are mainly within the moderators of the game plan.

🚩 Ponzi schemes

They’re fraudulent schemes. Long story short, early investors receive profits only with the investments of recent investors. And the story goes on. This type of scheme can be a tricky one, as it seems quite sustainable until it blows. This is the reason why you should make your DYOR!  

🚩 Romance Scams

As strange as it may be, it’s a common practice for scammers to use this type of fraudulent arrangement. With the digital rise in our daily life, online relationships are more frequent, too. So scammers use fake relationships to manipulate people. Eventually, they persuade their partners to send money in the form of cryptocurrencies.

🚩 Phishing Sites 

What are they? Well, mostly fake websites. Scammers usually lure people into clicking some malicious links to these websites. Afterward, they gather your personal info, such as name, email, address, etc with several scam strategies such as “You need to reset your account password”. 

Their ultimate goal is to obtain your wallet's key information - whether you have a custodial wallet on an exchange, or a non-custodial one and have poor storage of your seed phrase. Always be extremely vigilant against this type of scam. No company will ask you to reset the password unless you request it. Also, no admin or platform will ask for your seed phrase. That’s only meant to stay with you, so you should NEVER EVER SEND YOUR SEED / BACKUP PHRASE.

How to stay away from scammers? 

💡 Be Vigilant

As we said before, if it sounds too good to be true, it’s most probably NOT! No matter the type of scam, you need to stay aware all the time. Check every detail, and take into account any sign that it may lead to a scam situation. Think twice before you send your personal info to someone. Crypto Universe is where extreme vigilance should come to play.

💡 Ask yourself some relevant questions

Why would some people you don’t know make a promise to you? What’s in it for them? Why would they help you so easily with something? Why would they ask so many questions? What can they do with your account information? How can they use it? When in doubt, it’s important to ask yourself some questions in order to clarify a situation.

💡 Don’t trust an “admin” that sends you a message first

In the majority of cases (let's say 99,9%), if someone messages you first, he’s not an admin, no matter what name he appears to have. It’s just someone who steals the identity of an admin and wants to lure you into his scheme. Everybody knows the admins won’t message first. So always pay attention to this issue. 

💡 Don’t click on suspicious links

If you receive the invitation to click on a specific website, you need to always verify in advance that the website URL is exactly the same as your platform’s address. Most of the time, they are almost the same, but not entirely.

Also, verify the email address of the sender or the social media account, depending on which platform he contacted you. And if you click on a suspicious link by mistake, you absolutely need to avoid sharing your personal info. Someone may record your login details and can steal your assets, eventually. Also, ensure you don't connect your wallet anywhere until you don’t double-check the site.

Even if you don’t receive a suspicious link from someone and just want to access a website or exchange, we strongly advise you to always go directly to the specific website to stay away from phishing scams. How can you do that? You can make a bookmark with the exchange page or save the link in your notes and access it every time you need to.

💡 Don’t send money and expect to have them multiplied or returned

“Get rich quickly” might be the scammer's motto, but you should never buy it. Be cautious, these opportunities are not real, therefore not achievable. The huge rapid gains are only possible in a fraudster scenario. Only you can “multiply” your funds if you are into trading. If someone promises you to multiply your investment, be sure you could be a targeted victim of a scammer. 

💡 Report the scammers

Most probably, if you send your funds to someone, or lose them, it’s highly improbable to recover them. What you can do to prevent that is this: if you see a crypto scammer (Facebook, Twitter, Youtube, etc), you can report it to the Support Center. On Telegram, you can report the scammers to @notoscam. In the MultiversX ecosystem, you can report the scammers on the @ElrondScambusters Telegram group.

💡 Turn off your Telegram & Discord DMs

Telegram and Discord are the most popular platforms where you’ll find scammers easily. Or… they will find you. 🙂 Being a hub for several crypto communities, these platforms are often targeted by fraudulent people. It’s very common for people to be assaulted with private messages, especially after they had a conversation in a group. What you can do is turn off DMs from unknown people on Discord. On Telegram, you have the option to update the setting in order to prevent random calls and group invites.

💡 Store your seed phrase in a secure location

And when we say that, we mean an offline location, which only you know. We can give you a tip: Kryptodots is the best way to encode, store, and protect your digital assets. Kryptodots is an offline device made of stainless steel. Its scope is to protect your secret phrase, therefore, your digital assets. 

The only reasonable alternative to the Kryptodots is a piece of paper. But we can all imagine its weaknesses. It can easily degrade, catch fire, or get wet and become useless. And it’s not just that. Let’s say you choose to make a laminated paper that's impermeable. It’s true, you get a higher level of protection, but not the best one. It still can burn easily and also your words wouldn’t be encoded. Owning a Kryptodots assures you of this protection, too.

💡 Don’t share your seed phrase with anyone

It might be the last point on our list, but definitely not the least. This is actually the most important thing for you to remember. Your wallet’s seed phrase is unique and therefore it’s like the key to your wallet. Anyone who has your seed phrase also has access to your wallet. So your money would be compromised if they have your seed phrase.

Your seed is the master key to your wallet, also meaning that it has all the information needed to recover the wallet. If your computer breaks, your hard drive becomes corrupted or even the hardware wallet, i.e. the Ledger, gets lost, broken, or stolen, you can download the same software wallet again or buy another hardware wallet and use the seed phrase backup to get your assets back. Apart from that, you will not need to enter your seed phrase anywhere. If someone asks for it, it’s a scam. Don’t share it and make sure you report it. 

Remember that as long as you don’t share your seed phrase with anyone, your digital assets are safe. 

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