With Crypto’s popularity, there has been a steady rise in the number of financial scams. Since the start of 2021, there has been a report by the US Federal Trade Commission of over 40,000 people reporting losses from crypto scams. The total assets lost have been over $1 billion.
The losses experienced to act as alerts for crypto users to stay vigilant and keep an eye on the most common ways scammers utilize.
The application in which blockchain is built is decentralized. Therefore, executing any activity in the blockchain cannot be hidden.
Here are some of the tricks that scammers use and may help any user to stay alert.
Top 5 Scams to Evade
1. A Website Asking for Private Keys
At the starting point of any crypto journey, there are different activities that someone must undertake to have a good start. One such activity involves forming crypto wallets to store and keep digital assets.
These include Metamask, Coinbase, exodus, Trust Wallet, Bitgo, etc.
All wallets are secure enough, with assurances like seedphrases, email accounts, names, or even a private key.
Scammers sometimes take advantage of newbies by asking for this sensitive info. Once they acquire a seedphrase, it becomes easier to access the funds in the wallet.
A website may ask for a seedphrase, when it involves some winning incentive that may make one give in.
A private key is personal and should not be given to anyone.
2. Investing in an Individual’s Behalf as a Trusted Creator
In the crypto space, several apps are required for their proper functioning. Such has been a nest for scammers to operate anonymously. The most familiar are Discord, Reddit and Telegram.
The scammers may create a bot that looks very official to impersonate a project. They then ask for funds to invest on behalf of members with higher returns.
They then scam individuals of their funds. The trick is to check on their names, for instance, in Discord, to see if they are official developers.
3. Sending a Seedphrase or Private Key with Money in it
A scammer may entice a user with a wallet containing some assets. However, for the assets to be withdrawn, there must be the presence of some gas fees.
Some funds in the wallets can take even $50 to transact, while $10 will be the actual gas fee in Ethereum.
Once the Ethereum is sent to the account, there is usually a bot that automatically detects that new funds have been sent. Immediately, it takes out the allowable fund from the account.
4. Smart Contract Bug
In this trick, there is a creation bug allowing someone to buy a token but cannot be able to sell it.
It may be, for instance, in the Erc20 contract. Therefore, a decentralized exchange does not need your permission to sell a token.
They may also add a rebase function into the token contract so that when you sell a token, you get a loss of 99%.
5. Phishing on Websites
Some scammers may replicate crypto sites that look exactly like the ones anyone may intend to invest in. In appearance and operation, they are very dicey. They have the same interface and information, just like the original site.
They, in most cases, change the domain name of the original website to look nearly familiar. They also may change the smart contracts, such as when one interacts with the websites, they get access to funds.
Evidence of Crypto in Different Platforms
It is evident that crypto scams come in different forms, and unfortunately, criminals use methods that easily confuse and entice users.
They may use combined tactics to improve their chances with a user’s funds.
Stay vigilant and safe in the crypto space.
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