Crypto scams are on the rise. Here’s what to watch out for and how to help protect yourself from fraudulent schemes.
The increasing popularity and adoption of cryptocurrencies have led to a surge in scams and fraudulent schemes. Cybercriminals are becoming more sophisticated, devising new tactics to exploit the anonymous nature of digital assets and the lack of regulation. Here’s a list of common scams and a few ideas to help protect yourself and your investments when navigating the crypto world.
Phishing scams: Cybercriminals impersonate legitimate entities to deceive users into sharing sensitive information or sending funds to their digital wallets. Phishing scams can appear on fake websites, in emails, or in messages on social media platforms.
Ponzi and pyramid schemes: Luring investors with the promise of high returns, these scams require a constant influx of new members to maintain payouts. Early investors are paid using new investors’ funds, creating an unsustainable cycle that ultimately collapses.
Fake initial coin offerings (ICOs): An ICO is a way for a company, typically a young startup, to raise funds. Some scammers create fake offerings to lure investors into purchasing tokens for nonexistent projects. The fraudsters behind these schemes typically disappear after they collect substantial funds.
Pump-and-dump schemes: These scams involve artificially inflating the price of a cryptocurrency (through coordinated buying), then selling the asset once the price has risen significantly. Unsuspecting investors who buy into the hype are left holding the bag when the price crashes.
Malware and ransomware attacks: Cybercriminals use malware to infiltrate users’ devices and gain access to their cryptocurrency wallets. Ransomware attacks involve encrypting the victim’s data and demanding payment in cryptocurrency to unlock it.
Research thoroughly. Conduct extensive research on any cryptocurrency investment opportunity, including its legitimacy, the team behind it, and its track record. Look for independent reviews and expert opinions to help you make an informed decision.
Verify the authenticity of websites and emails. Be cautious when clicking on links in emails and text messages. Double-check the URL to ensure it matches the official website of the organization you’re dealing with. Look for the padlock symbol and “https” in the address bar, which indicate a secure website.
Protect your personal information. Never share sensitive information, such as your private keys or wallet passwords, with anyone. Use strong, unique passwords for all online accounts, and enable two-factor authentication (2FA) whenever possible.
Be wary of unrealistic promises. If an investment opportunity sounds too good to be true, it probably is. Be skeptical of guaranteed high returns or get-rich-quick schemes.
Use reputable exchanges and wallets. Choose well-established, reputable cryptocurrency exchanges and wallets with a verified track record of secure operations. Check for any history of security breaches, and continuously enable security features such as 2FA and withdrawal-address whitelisting (which designates addresses in your contacts list as approved recipients of cryptocurrency withdrawals).
Stay informed. Keep up-to-date with the latest news and trends in the cryptocurrency space. If you’re planning on investing or have already invested, consider joining online forums, following industry experts on social media, and subscribing to reputable newsletters to stay informed about emerging threats and best practices.
The rise in cryptocurrency scams is a troubling trend that threatens overall trust in digital assets. However, by staying vigilant, conducting thorough research, and following best practices, you can confidently safeguard your investments and navigate the cryptocurrency landscape. Remember, knowledge is power, and staying informed is often the best defense against scams and fraud.
Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.