5 Major Types of Cryptocurrency Scams that Can Fool You

Reports and recent incidents show that cryptocurrency scams are gaining strength in 2021

Cryptocurrency is progressively seizing the media attention in 2021 and so are crypto scams. Cryptocurrency scams have hit an all-time high in 2021. Money laundering in crypto is not a new phenomenon. According to the CipherTrace report, crypto criminals have laundered US$432 million by the end of April. About 56% of the laundered amount was related to DeFi.

Notably, this number has surpassed the whole of 2020 that had witnessed a loss of US$1.9 billion, and 2019 that hit a record of US$4.5 billion in cryptocurrency and bitcoin scam losses.

A recent relevant citation of cryptocurrency scam can be Elon Musk impersonators who executed embezzlement of $2 million. The theft was a part of a phony giveaway. Cons posing as celebrities promised to multiply the cryptocurrency investments but pocketed the sums instead.

Another major incident of a crypto scam involved a British woman who lost all her savings worth £9 000 (Rs 9,00,000 approximately) on cryptocurrency investment.

Other Five Indecipherable Cryptocurrency Scams

Before taking safety measures to prevent cryptocurrency scams, it is important to understand the areas and aspects of crypto that are mostly tapped on by criminals and hackers. Analytics Insight has created a crypto scams list of five crypto scams of 2021.

DeFi Put Off the Stroke 

DeFi stands for 'decentralized finance', an attempt to refurbish and transform the traditional trading methods and models. Decentralized finance allows users to stake their cryptocurrencies to users and secure maximum profits through interests.

While some reputed DeFi platforms ensure maximum returns on lending money, some are scams through and through. Such feigned platforms lure investors into lending money by promising heavy profit but pocket the money the investors lend. Such scams are so craftily executed that investors often fail to recover the lost amount.

Nonfungible Tokens Scams 

Nonfungible Tokens or NFT are in popularity in the current times. NFT runs the risk of being duplicated. It contains specific hashtag codes and the one who is in charge of the hashtag codes holds the power. There are reported cases that NFT hack recovery is difficult as deciphering hashtag codes is not a layman's job.

Pumps and Dumps of Altcoin  

An Altcoin is often counted as one of the cheapest and illiquid penny stocks with small market caps. The crypto pump and dump are characteristics of penny stocks and Altcoin to join the flow. However, Altcoins being volatile often fall into the hands of scammers and criminals.

Scams Caused by Viruses and Malware 

New strategies and creative attempts to breach into an investor's wallet can at times be tedious. To circumvent this overwhelm of new ways to execute wallet breaches, hackers and criminals resort to age-old malware and viruses to gain access to crypto wallets. For this reason alone, two-factor authentication can be a protective shield for crypto-wallets.

Fake ICOs 

Fake Initial Coin Offering (ICO) is an issue that is still prevalent and worries out crypto investors. The year 2017 had witnessed an explosion of ICO scams when the rate of fake ICOs touched 80%. Fortunately, the number had degraded in the following years. Fake ICOs remain to be a matter of concern to investors even today. Big Coin stole $6 million from customers.

The Federal Trade Commission Warns about the Manifold Increment in Crypto Investment Scams 

The Federation Trade Commission (FTC) on May 17 had published a report on crypto investment scams. The scams amounted to a loss of $80 million. FTC has noted that investors belonging to the age group of 20 to 40 are mostly the prey to such cryptocurrency and bitcoin scams.