A few years ago, when someone said that fiat currencies could be replaced, they would not have believed it. However, in the world of digitization, digital currency is the way forward.

For a long time, we have been transacting in a paperless environment. Although the steps have only been taken by a few and not everyone, it seems only logical that these paper currencies be replaced by digitized ones.

With the financial fiasco created in 2007-2008 leading to a global recession, it still needs to be clarified if an individual or multiple software developers under the name of Satoshi Nakamoto proposed a digital asset that would answer the tethering problems in the monetary system.

Fast forward to today, and the popularity of cryptocurrency has been surging. There are several who do not have prior knowledge regarding cryptocurrencies and have shown immense interest in them.

Since 2009, after the launch of Bitcoin, you will find thousands of other cryptocurrencies or altcoins.

Expose The Dark Side Of Crypto Scams

It is true that, due to its inherent qualities, a few initially gravitated towards it; it was the government that intervened and took an anti-cryptocurrency stand. It was due to the fact that many antisocial elements like gangsters, drug lords, warlords, and so on could make most of the borderless transactions.

Although money laundering has always been prevalent in society since the dawn of time, the usage of cryptos for laundering dirty money has now become almost effortless and instantaneous.

After the internet became widely available, scammers and hackers made the most of this technology. Targeting their victims remotely while cleaning the bank coffers became the norm. With the introduction of cryptocurrency and its rising popularity, it has become easier for many to become targets of a crypto scam.

As per the Federal Trade Commission, or FTC, $680 million was lost to a crypto scam in 2021. The figures are more discouraging in the first quarter of 2022. $329 was lost to crypto-related scams.

The Rising Threat in the Crypto Sphere

During the global pandemic lockdown, many businesses suffered, and the entire world economy came to a grinding halt. The US government had to issue stimulus checks to keep the economy afloat. Due to disruptions in global supply chain management, the economy could not progress. Thus, the entire financial market collapsed.

In this period, the price of cryptocurrencies, especially Bitcoin, reached its all-time high of $64,000. It was also noted that many financial institutes took the stimulus checks and invested a part of them in these cryptocurrencies. Since Bitcoin dominates the crypto market with its huge market capitalization, any change to it can cause immense price fluctuations.

Post-pandemic, the global lockdown was lifted, and many started investing in cryptocurrency as they had witnessed how it was the only market that survived when the rest of the markets collapsed. However, scammers and hackers have also understood the importance of cryptocurrency and are targeting several crypto users.

As we have already pointed out, crypto fever is gripping the world due to its survivability in the harshest economic conditions. Out of all the rules and laws of the economy, cryptocurrency follows only the supply-demand law.

Since many only consider it to be a new financial asset where opportunities to make profits are endless, they do not have the necessary education regarding how the crypto market works and the different factors that will allow its price to move.

Such audiences are more likely to fall victim to a crypto scam compared to the rest of the crypto users. Scammers and hackers have infiltrated the crypto market and have created substantial amounts of money for themselves. In this article, we intend to spread scam awareness and show how to spot a potentially fraudulent scheme when it represents itself in the form of a business or investment opportunity.

Common Types of Crypto Scams

You would be surprised to know that only a few scams are new, while the rest of the scams perpetrated by con artists are age-old. These age-old scams have been adapted to suit the current digital world. Just like before, scammers and hackers target individuals with a fake promise to make money, while in reality, these con artists are interested in free money, which they steal from their victims.

Investment Opportunities

They will impersonate a financial advisor and appear to have a good grip on their knowledge regarding crypto investments. They will impress their victims through charts and graphs and make bogus claims that they have made their clients millionaires, and some of them are on their way to becoming billionaires.

Their prime focus is on how much money the client would make by investing a certain amount. The entire recommended investment scheme revolves around the money that would be made and not how and where the money would be invested, which will assure a good return.

They would gain more money if they were to invest more, and of course, such business opportunities are free of risk, a bogus claim they make.

Below are a few of the shady scams that are popular with these con artists to lure in their unsuspected victims.

Ponzi Scheme: Named after the famous con artist Charles Ponzi, this age-old scam is still prevalent in society; however, with the help of the internet, this scam has adapted to our digital society, reaching great masses. This business model is simple: Ron is robbed to pay off Robin. As long as there is a steady supply of fresh recruits, the business model stays afloat. New investors' money is stolen to pay off older investors. Once the supply dries up, these con artists will take away all the money from their investors and run away.

Pyramid Scheme: It is similar to a Ponzi scheme, only differing in certain aspects. In a Ponzi scheme, all the money is directly sent to the scammer. In this scheme, the money still reaches the scammer; however, the recruits are incentivized by recruiting more to earn certain privileges and bonuses. and the survivability of this scheme is also the same as the Ponzi scheme; once the recruit dries up, the game is up, and the scammer vanishes with the money.

Crypto Broker: You need an exchange to trade your cryptos, and for that, a crypto trading platform. These platforms have all the necessary tools and historical data so that, based on your trading style, you can strategize your position. Such data helps you make informed decisions.

Sometimes these crypto brokers will also help you earn a passive income by encouraging you to stake your cryptos on their platform. A reputed and registered crypto broker and brokerage firm diligently takes such steps.

Not everyone can always make an informed decision while trading in the crypto market. However, brokers would help you trade on your behalf if you authorized them to do so. They earn commission based on either trade or spread.

However, con artists under the guise of a crypto broker will encourage you to buy and trade cryptos on their accounts. They will also encourage you to stake your cryptos by promising unrealistic returns.

Once you subscribe to their services, they will ensure that you only end up investing more and more, and when it comes to withdrawing from your account, you need to pay them more. If you allow them to trade on your behalf, then they will indiscriminately trade regardless of whether you make a profit or a loss.

Scammers will also levy exorbitant charges like withdrawal fees, crypto withdrawals, crypto tax charges, and so forth.

Crypto Trading Bots: Crypto trading bots are a reality and can be customized based on your trading styles. These are programs that run on algorithms that assure you to make more wins than losses.

However, having one of these bots is expensive since a lot of time, money, and other resources are invested to create a bot that will achieve higher profits than losses. Since research requires a huge amount of money to create, only reputed crypto brokers and financial institutes can create a successful bot.

Scammers can create bogus crypto trading bots that will assure you more losses than wins.

Since not everyone can create a crypto trading bot that has been field tested and can carry out successful trades, scammers sell their bogus bots at a competitive price to lure in their victims.

Romance Scam

Everyone likes to get entangled in a love affair. With less time at hand, many prefer to meet online for a date rather than meet in person for a romantic encounter. Several online dating apps are available to help meet the younger hearts who earn for a greater future.

Social media platforms, messaging apps, and dating apps have such a profound impact on society that many rely on them.

Scammers will create fake profiles that will boast about their fake achievements and intentions toward humanitarian causes, like serving in the military, being a doctor or nurse, or someone else who is engaged in philanthropic work with the intention of making this world a better place to live.

Once they entangle their victims and gain their trust, they will try all the investment scams that we have mentioned above in the article.

Red Flags To Watch For

It does not matter how you were contacted, either through an investment opportunity or someone on a dating app that you have recently met. Here are a few signs of a potential fraudulent crypto scam. With the intent of unmasking crypto scams, we have provided a few red flags below.

Investment Opportunity:

• The Financial Advisor will project a scheme to be one of a kind that will make you super-rich.
• There is no risk involved with this huge opportunity to make money.
• uses heavy jargon without explaining those terms to you.
• uses high-pressure tactics and coercive methods to convince you.
• as details that no financial institute has ever asked for before.
• If you lack the necessary funds, you would be advised to take money out of your emergency funds, like college tuition, loans, mortgages, or even applying for a personal loan.

Romantic encounter:

• Your love interest stays far away, which might also include a flight or two.
• The person will declare their love for you within a few encounters.
• Makes promises to wed you and showers you with endless compliments.
• will make you feel special.
• It takes years to meet you physically, but at the last possible moment, the meeting never happens.
• They will want to know more about you.
• They will ask you for sensitive data that you would never share with your close ones.
• They will either be in constant need of money or cryptos or might require your assistance to foot their medical expenses.
• They might even want you to pay up to break a contract so that they can be with you.
• They might suggest a crypto investment scheme, and once you get on it, they might only contact you for investment and may even forget your name.
• They will also ask you to share your crypto account details and wallet address.

Secure Trading Practices

It can be very frustrating when someone rips you off. One of the best practices is to have the reigns of your finances under your command. So if you feel that you have genuinely met an interesting person online who wishes you to invest in a crypto trading opportunity, here are a few steps that you can take to avoid falling for a crypto scam.

Researching And Verifying Platforms

You are solely responsible for your finances; you must understand that there are several con artists online who are after your money. So when a business opportunity arises, ensure you do research first. Do not cave into emotional blackmailing.

Try to check online if the crypto broker or brokerage firm has a valid registration and is regulated by a government agency or a reputed private firm. Research the review page to understand how clients are treated.

Once you get the details of the business opportunity, go to your local law enforcement agency and verify that the investment scheme that is proposed to you is allowed to be carried out in your state or country. Some are banned, so ensure that they have the jurisdiction to conduct trade in your country or state.

Avoid signing those papers on the recommendation of the crypto broker or financial advisor; take your time to read all the terms and conditions; and if you find it challenging, then visit your local certified public accountant or CPA.

Always go for a reputed crypto broker or brokerage firm. This will also ensure that the crypto trading platform that you download is genuine.

Using Hardware Wallets

In recent times, several crypto exchanges have gone bankrupt, taking away the money of the crypto holders who had stacked their cryptos on them.

You need to do research and choose a cold crypto wallet. On these devices, you can store your cryptos without the fear of losing them. They may be a bit expensive, but try to take a wallet with multi-factor authentication, as it will deter any hacker or scammer from accessing your stored cryptos.

Research well and avoid buying the best wallet on the online market in refurbished condition. You cannot be sure if the wallet was rigged by a scammer or a hacker.

Avoiding Public Wi-Fi for Transactions

It would be wise that you avoid using public Wi-Fi while you complete your cryptographic transaction. Public Wi-Fi is notorious for being hacked by hackers. Hackers install special software that will record all the crypto transaction details and wallet addresses. Once collected, these hackers will then hack into the crypto users' wallets and steal all their cryptos.

Educating Yourself About Crypto

You need to understand that, unlike any fiat currency, cryptocurrency is always changing. There are several breakthroughs that will either make or break crypto. There are also many bogus cryptos that are worthless.

So before you dive into the crypto world, you need to educate yourself on the basic concept of what a cryptocurrency is and how it works.

You can always go to a reputed online crypto broker or brokerage firm and subscribe. Many provide online, self-paced crypto trading courses. They will teach you everything that you need to know while trading in the crypto market. The selection of cryptos, research, strategy, and subsequent crypto trading

They also offer a demo account where you can hone your crypto trading skills. The more you learn, the better it is. Such steps can ensure that you make informed decisions while trading in the crypto market.

Legal Recourse for Victims

You might be surprised that there are several online fraud protection firms that not only deal with the recovery of online fraudulent traditional financial assets but also cryptographic assets. Before we dwell on how to file a complaint with the local authoritative department, we need to prepare some groundwork that will help ease the process of recovering the lost cryptos.

Once you discover that you have fallen victim to a crypto scam, do not delete anything that is associated with the scam. Here are a few steps that you need to take.

• Do not entertain any calls from the scammer.
• Take a piece of paper and include all the details.
• Recollect the details about the scam, especially the absurd ones.
• Mention the URL and the name of the scammer's website.
• Write down the address, HQ address, and contact numbers mentioned on the website and those personally given to you.
• Any conversation between you and the scammers through social media platforms, messaging platforms, or emails must be saved.
• Any charts, graphs, or other pictorial details should be saved and taken as screenshots. These also include the ones where the scammer claims that your portfolio value is surging.
• Scammers wire account and crypto wallet address
• Your crypto wallet address and the bank account that was used in the scam

After recollecting all the events, you now need to get in touch with the higher authorities to reclaim your lost financial assets.

• Personally visit the law enforcement agency and file a complaint with all the details that you have collected.
• The Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC) should each be provided with all the details that you have written down and file a complaint with each authority mentioned if you are a US citizen.
• Contact your local governing bodies who protect citizens' financial rights, if you reside in other countries.
• Contact the Internet Crime Complaint Center (IC3) and provide them with all the details regarding the scam.
• Get in touch with your bank and credit rating bureau and lodge a complaint against the scam. Ask them to freeze your account until the investigation is completed.

If you want a speedy recovery of your lost crypto assets, then you have the alternate option of pursuing the case. Of course, you do need to follow the above-mentioned steps.

You can find several online financial fund recovery agencies that are experts in financial forensics. They will help you track down your lost funds. These firms are equipped with the latest gadgets to track down lost cryptos and recover them, while the legal team can help build a case for you.

Conclusion

Although cryptocurrency is not getting the recognition that it deserves, the world is slowly but surely changing its opinion regarding it.

Before investing in a cryptocurrency, you should understand that it is a highly volatile market and that you must invest with caution. Invest the amount in the crypto market that you are willing to let go of.