Cryptocurrency scams have shaken the monetary business since the day Bitcoin acquired unmistakable quality. According to data trackers, over a billion dollars are lost in such scams, with thousands of victims each year.
Key points:
- Crypto scams are on the rise. As a result, over $80 million lost to different forms of scams
- Pyramid or Ponzi schemes, Phishing, and imposter websites are among the most common types of crypto scam
- Working with verified exchanges and payment gateways like NOWPayments will help you avoid some of these scams
What to Know About Crypto And Scams
Reports to the FTC’s Consumer Sentinel propose that scammers take advantage of the buzz around cryptocurrency and attract potential victims. Since October 2020, reports of scams have soared, with almost 7,000 individuals detailing losses up to more than $80 million on these scams.
Their revealed average loss is $1,900. Contrasted with a similar period a year before, that is twelve times the number of reports and almost 1,000% more in detailed misfortunes.
How Does Crypto Scam Affect Your Business?
If your business deals directly with cryptocurrencies, either by accepting payments or facilitating transactions, you need to be wary of crypto scams. As earlier mentioned, crypto scams are at an all-time high.
These scams are not only targeted at businesses but also their customer base. Scammers will often work from any angle, putting in considerable effort and time they need to gain the trust of a potential victim.
Funds of investors and businesses have been siphoned by scammers who fell victim to phishing. Scammers can divert payments from customers to a business using imposter wallets and websites.
While cryptocurrency has been proven to be one of the ways you can skyrocket your profit, it also poses significant risks. As such, every business must know how to avoid these scams.
Tips to Protect Your Business from Crypto Scams
To be able to prevent your business from scams, getting acquainted with the schemes and gimmicks is a crucial tool. Hence, we would be mentioning the 4 most used ones, which are;
Pyramid or Ponzi scheme
Ponzi schemes are designed to reward old investors with money raised from new investors. Dating back to the 1800s, Ponzi schemes are still common today, more so in the crypto industry.
Marketed as Bitcoin’s killer, Onecoin will be remembered as the biggest crypto Ponzi scheme, defrauding investors of $5.8 billion. These schemes work well until there are not enough new investors to reward existing investors or the founders are caught.
How to avoid it:
- Avoid “risk-free” investments promising a high guaranteed return
- Beware of crypto projects that drive you to recruit new investors to take advantage of higher profits.
- Avoid projects with vague descriptions but promise too good and not true returns.
Imposter Wallets and Websites
Wallets, whether hardware or electronic, are essential tools in storing our crypto. However, scammers have taken this route to defraud people using fake wallet apps and websites.
Some pretend to be Bitcoin wallets, while others pose as exchanges. Usually, they work until users deposit their crypto.
How to avoid it:
- Find a popular and reliable exchange or payment gateways like NOWPayments or Binance
- Check out the information for the platform and do your due diligence confirming that it is not a duplicate website. You can confirm from the development team and comments from users
- Download applications and software only from authorized wallet providers
Phishing
Phishing often involves scammers sending emails to users from so-called crypto exchanges or wallet providers. In this email, the predator places a link to a fake website.
The primary purpose is to get the user to go to a fake page and enter their data (username, password, private key, etc.). This sensitive information allows the cyber thief to siphon a victim’s fund from the original website.
How to Avoid it:
- Avoid clicking unverified links.
- Never disclose your private key, especially on platforms you don’t remember registering
- Some anti-virus provide a level of protection against Phishing.
Social Media Scams
On social media, you need to beware of individuals asking you to send money to be doubled. Sometimes, these messages come from duplicate accounts of influential individuals and reputable companies – but that’s part of the trick. For many answers that appreciate the particular generosity of the above accounts, the freebie scams only include fake corporate accounts or implemented bots.
Conclusion
It is important always to remember that the risks of fraud and speculation are high in the crypto space, as seen from the increasing number of scams reported. Therefore, always transact with verified individuals and companies to keep your business from falling from these scams. Most importantly, payments should be made with reputable gateways like NOWPayments.