Like imaginary gas and oil wells, fabricated promissory notes, overseas investments and other familiar scams, fraudulent cryptocurrency offerings have become a major target for criminals. Scammers can impersonate business people, investors, celebrities or even family members to lure victims. They may make promises of large instant rewards or high returns over a short period of time. They might also request payment in cryptocurrency, which is not a normal practice for any legitimate company or financial services firm. Never pay anyone who contacts you via text, email or social media asking for cryptocurrency. It’s usually a red flag.
Fraudulent crypto exchanges and wallets are easy to spot by searching for the coin or exchange name on Google with words like “scam,” “review” or “warning.” If a new crypto is being offered, check its website and whitepaper to see if it has any real purpose. If a company has made claims of large partnerships or celebrity endorsements, search online for confirmation of those claims and to see how other users have responded.
Many scammers will promise to grow your investments if you transfer funds to their "investment account." This is known as a liquidity mining scam. Victims move their cryptocurrency from their own wallets to the scammers' fake platform, which then shows false returns on a falsified dashboard. When victims believe they are making money, they invest more. Eventually, criminals steal all the cryptocurrency from their victims' wallets and accounts.
Another way crypto scammers can Cryptocurrency scam steal your money is by threatening to publicize embarrassing or compromising photos or videos of you. This is called extortion and should always be reported to law enforcement.
Scammers can also posses your private cryptocurrency keys, which control your wallet access. To prevent this, don’t give your private keys to anyone, and store them in a cold wallet (not connected to a cryptocurrency exchange or other online account) that is protected with multi-factor authentication. It’s also a good idea to use reputable hot wallets, such as Exodus or MetaMask, and reputable cold wallets, such as Ledger, Trezor or Bitbox, that are password-protected.
Be wary of companies that pressure you to invest quickly. Remember, crypto is a high-risk investment, and no asset can reliably guarantee you high returns. Research the company and its founders before investing. Use a reputable digital wallet with secure multi-factor authentication, and keep your crypto wallets and exchange accounts separate. It’s also best to use wallet apps that use HTTPS, which indicates the site is encrypted and secured. You should also not link your crypto brokerage and traditional bank accounts permanently, as it makes it more difficult to track or recover stolen funds. If you think you've been the victim of a cryptocurrency scam, immediately report it to your bank and your local police department. You can also file a report with the FBI's Internet Crime Complaint Center at www.ic3.gov. The FBI is working to track these crimes as they occur. However, because these perpetrators are often outside of the United States, it is hard for law enforcement to catch them in the act.
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