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Common Cryptocurrency Scams and How to Avoid Them

Cryptocurrency in the Philippines is still blooming. Its popularity skyrocketed in 2017 with Bitcoin and has since become a popular medium of investment in the country. In a report by The Philippine Star, the volume of cryptocurrency transactions increased by 36% in 2020, showing the rising interests of Filipinos in virtual currency.

However, with cryptocurrency’s increasing demand also comes the growing threats to scams and cybercrimes. In 2018, police nabbed a couple for operating a Bitcoin scam worth P900 million from 50 investors. As Filipinos are still starting to learn to deal with cryptocurrency, perpetrators are taking it as an advantage to attract investors with a promise of opportunities and returns.

How can one avoid falling for these illicit schemes? One solution is through learning the common cryptocurrency scams in the market.

Phishing Scam

Phishing attacks are also now targeting the cryptocurrency industry. Typically, the scam is perpetrated using emails or SMS that offer cryptocurrency investment opportunities. These messages contain links that redirect the receiver into a website and prompts them into transferring cryptocurrency or traditional currency as an investment. Once the transfer is made, the scammers take down their website or platform and stop communicating with the investor.

Recently, more people are also experiencing crypto phishing through clones of legitimate crypto websites and apps. These scammers often target individuals who already have an account with a real crypto platform. The website and app will look very similar to the original ones to trick the users into believing that they are in a trustworthy space.

If, for example, the user wants to connect to his wallet using the website, there is a button on it that opens to a pop-up window requesting the user’s seed phrase or private keys. Once the user enters their private keys, it will automatically steal the user’s tokens.

To avoid these scams, always check the URL address of the website. Fake websites typically use HTTP instead of HTTPS, and the browser will read it as “not secure.” The fake and the original website will also have minimal differences like misspellings and incomplete website interface. Another red flag is when the platform offers free wallet withdrawal. Free withdrawals are suspicious as withdrawals require handling fees.

Exit Scam

Exit scam, sometimes called Initial Coin Offering (ICO), is the scheme where defrauders pretend to have created a new cryptocurrency that promises big profits and opportunities. This scam also comes with the launch of a new cryptocurrency platform that gives out many convincing marketing spiels. The goal of the scheme is to attract people into raising money for the fake cryptocurrency’s ICO (similar to IPO in public companies). Once the money is collected, the scammers vanish along with the funds.

Some variations of exit scams do not dwell with ICOs. These scams will typically look like a Ponzi scheme where the money generated from new investors creates the illusion of a profitable investment. Similarly, once the scammers have collected enough money, they will disappear with the funds.

Cloud Mining Scam

Cryptocurrency cloud mining is a computerized method of verifying cryptocurrency transactions and creating new cryptocurrencies in circulation. Mining requires expensive hardware, so cloud mining platforms host mining equipment to make it less expensive and uncomplicated for miners. However, scammers also found a way to defraud miners by posing as a legitimate mining platform. The miners pay for the platform’s service, and the perpetrators steal the cryptocurrencies from them.

How to Avoid Cryptocurrency Scams

Similar to traditional currency and investments, cryptocurrency has its risks and rewards. But everyone can minimize the risks by taking precautions with their decisions. For example, the cryptocurrency benefit sounds too good to be true, then it most likely has some concealed ill agenda. Additionally, keeping up to date with new risks and threats to cryptocurrency investing will prevent one from falling prey to the rising tactics of scammers.

Securing private keys are also critical in safeguarding crypto wallets. Never share seed phrases with anyone, and if possible, memorize them. Users also have the option of securing their crypto wallets through paper wallets, hardware wallets, and hot wallets. But these options also have relative risks, so users should use them with discretion.

There is no real investment that offers little to no risks, especially in cryptocurrency as it is still young and thus very volatile. Never take promises at face value and do thorough research before making any financial decisions.

Jumpstart Your Cryptocurrency Trade with Coexstar

In the Philippines, Coexstar PH is one of the best Virtual Asset Service Provider (VASP) to buy and sell the world’s famous coins. It is registered in the Securities and Exchange Commission (SEC) and regulated by the Bangko Sentral ng Pilipinas (BSP). All activities in the platform are subject to the rules and regulations of the BSP and Anti-Money Laundering Act (AMLA).

Coexstar is a company that users can trust as they provide a secure and convenient exchange platform that is efficient, effective, and reliable. If so then you should check out the blogs we have below from COEX STAR or contact us for more information.

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