The popularity of cryptocurrency has captured the attention of people who want instant money; scammers have seen this as an opportunity. According to the 2021 Better Business Bureau Scam Tracker Risk Report, the crypto scam was the second riskiest in 2021. More than 66% of the victims of crypto scams also reported losing money.
Furthermore, according to an annual survey of securities regulators by the North American Securities Administrators Association, cryptocurrency investments and digital assets are the biggest threat for individual investors in 2022.
Scammers target many senior citizens and retirees living on a fixed income with fake short-term promissory notes. They guarantee the victims returns from 2% per day to 40% per month. This is too good to be true!
The victims confessed that They sent cryptocurrency to the scammer as a deposit into their bull crypto trading account. The scammers can convince their victims that this kind of investment is profitable. In some cases, scam victims were looking for cryptocurrency investments but ended up on shady websites pr social media accounts such as Tik Tok, What’s App, and Telegram. Many people fell victim to a get-rich-quick scheme in which scammers promised payouts that never happened or even required additional investment from the victim.
The most common crypto scams you should avoid
Ponzi Scheme:
a type of investment scam in which victims are fooled into investing in a project that never exists or “get-rich-quick-scheme”, that in reality, it is only lining the scammer’s pocket. Crypto scammers are always developing cutting-edge technology that is not specified clearly to attract investors to earn virtual profit. When the money is virtual, it is easy o falsify the data.
Pump and dump:
Scammers use false information to encourage investors to buy crypto assets in unknown cryptocurrency projects. Sometimes they use a fake press release to increase the asset’s price. When the asset’s value rises, the scammer sells his own shares, making a huge profit while leaving the victim with worthless shares.
Fake exchanges:
Scammers use emails and social media messages promising the victim access to the virtual money stored in the virtual exchange. To access this virtual exchange, the user must pay a small fee at the beginning. At the end of the day, the virtual exchange does not exist, and the user’s money is lost forever.
Fake celebrity endorsement:
In this scheme, the scammer hijacks or creates a fake account of a celebrity on social media. Scammer through fake accounts encourages the followers to invest in a bogus scheme. One of the case examples is that scammers took $2million from people by using Elon Musk’s name on the Bitcoin address.
Fake apps:
Cybercriminals imitate legitimate cryptocurrency apps and distribute them through app stores. If installed, it has the potential to steal personal and financial information as well as install malware on the device. Others may try to trick users into paying for services that do not exist, or they may attempt to steal logins from a cryptocurrency wallet.
Phishing/ Spoofing:
One of the most common forms of manipulation used by scammers is phishing. They use fake emails, text, and social media messages to appear like legitimate and trusted sources such as banks or government officials. In other words, they request payment using the legitimate institution’s name. The scammers always attempt to create a sense of urgency for the user to act quickly without hesitation.
How to avoid Crypto scams?
Investing in cryptocurrency can be fun, but it also comes with a high risk. here are some tips on how you can avoid the cryptocurrency scam
- Do your research before investing
- Once you have done your research, you should decide and measure your risk tolerance
- Never invest without knowing your risk tolerance
- Make sure that you have a secured e-wallet
- Do not invest too much money. Remember the principle of “do not put your eggs in one basket.”
- Be cautious of anyone who offers to make you money quickly with little risk.
As technology advances, there will be many loopholes for fraud. Irresponsible parties can easily deceive ordinary people who do not really understand technology. Therefore, we need to educate ourselves and not be tempted by the lure of unreasonable wealth.
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