Crypto scams are unfortunately common in the cryptocurrency space. While it’s important to note that not all cryptocurrencies or crypto-related projects are scams, there have been instances of fraudulent activities in recent years.
In this episode of Lawyers on the Block, Roman Kubiak and Kieran Forsyth from the Contested Wills, Trusts and Estates team look at how scammers are able to steal your cryptocurrencies, the types of scams out there, including the Alfa-Crypx / Alpha-Crypx scam, and, crucially, what can you do if you have been a victim of a crypto scam.
Listed below are some other common types of crypto scams to look out for:
Ponzi schemes
Ponzi schemes guarantee large returns on investment to early investors by using funds from later investors. Eventually, the scheme collapses when there are not enough new investors to sustain the payouts.
Multi-level marketing (MLM) schemes
Some MLM schemes use cryptocurrencies as their product, promising high returns for recruiting others into the scheme. These schemes often focus more on recruitment than on legitimate product or service offerings.
Fake initial coin offerings (ICOs)
Scammers create fake ICOs, mimicking legitimate projects, and convince people to invest in their tokens. Once they have raised funds, they disappear, leaving investors with worthless tokens.
Malware and ransomware
Hackers distribute malicious software that can compromise users’ computers or mobile devices. They may gain control over wallets and demand ransom in exchange for releasing the funds.
Pump and dump schemes
Scammers artificially inflate the price of a low-volume cryptocurrency by spreading false information or rumors. Once the price rises, they sell their holdings, causing the price to crash and resulting in significant losses for unsuspecting investors.
Phishing scams
Scammers create fake websites or send fraudulent emails that mimic popular cryptocurrency exchanges or wallets. They trick users into sharing their login credentials or private keys, allowing scammers to gain unauthorized access to their funds.
Fake wallets and exchanges
Scammers create fraudulent cryptocurrency wallets or exchanges that appear legitimate. Users deposit their funds but are unable to withdraw them later.
It’s crucial to exercise caution and conduct thorough research before investing in any cryptocurrency or participating in crypto-related activities. Always verify the credibility of projects, double-check URLs, and use secure and reputable platforms. Additionally you should stay informed about the latest security practices to protect your digital assets.
