Over a decade has passed, and cryptocurrencies have experienced unprecedented growth, evolving into a diverse ecosystem with thousands of digital assets and fostering innovative applications across industries. As more and more favorable news regarding the crypto industry pours in, more and more people are getting optimistic. Most reckon that investing in cryptocurrency can assure greater transparency, security, anonymity, and a greater chance to make huge profits.

However, many who do jump in thinking it is a lucrative opportunity to make money need to arm themselves with the necessary awareness and knowledge, so the chances of them falling for crypto scam tactics are quite low.

The pervasiveness of crypto scams

At the time, cryptocurrency was viewed as a means to launder money and was thought to be more popular with criminal-minded entities. However, there has been a huge paradigm shift post-pandemic.

Many have seen the survivability and adaptability of the crypto market during the pandemic period, and after it, there has been an outburst in the adoption rate of cryptocurrencies. Now everyone wants a slice of cryptocurrency, and this wildfire is raging across the globe.

The recent move by financial institutes like BlackRock, Ark Investment, and others, along with the changing stand by the SEC regarding cryptocurrency, has been positive news in the crypto communities.

However, such news events have also stirred a hornet nest among common traders who are showing a keen interest in them. A lack of necessary knowledge and awareness can be a serious disaster for these investors.

Many who are keen on the crypto market are not aware of the imminent threats that scammers and hackers pose.

In 2021, after the global lockdown was lifted, many sought refuge in the crypto market. As per a report by Chainalysis, during this period, a colossal amount of $10.9 billion was lost in crypto scams. However, in 2022, there was a sudden drop in crypto scams; only $5.9 billion was lost to such scams.

As per the experts, the fall in such scams can be traced to the fact that 2022 saw major chaos in the crypto market. Several crypto exchanges went bust due to mismanagement of their crypto users; funds, and the greed of their corporate leaders made many question the overall worth of these digital assets.

Again, countries like China and Russia started to impose a ban on these cryptographic assets. The world was also reeling from the aftereffects of the total global lockdown; many businesses went bankrupt, and several lost their jobs.

As a result, lack of money also contributed to many staying away from investing in the crypto market.

Since cryptocurrency went big, crypto exchanges have always been the target of hackers and scammers. The lack of knowledge and awareness of cryptocurrencies is considered a major factor for those falling prey to scam artist strategies.

Unveiling the Tactics

It is quite concerning that our education system teaches and encourages us to explore all the possible subjects and fields that surround us, except finance. We can know in detail how quantum physics works, but if we ask someone to handle their finances, most will fail.

The basic concept of understanding finance, which plays a huge role in our daily activities, has not been shared with us. Scammers know this and understand this very concept of mismanagement of our financial assets.

Each one of us wishes to upgrade our lifestyle and live a larger life. The only limiting factor is the amount of money that we have with us. Scammers known to prey on unsuspecting victims will weave a web of lies that will entice even those who consider themselves to be street-smart.

Since many of us do not know how to make money work for us, we fall easy prey to a pack of lies that these scammers effortlessly weave around their victims.

In this article, we will help and guide you in recognizing frauds that are quite common in the crypto world, so that you can avoid falling for such scams.

Phishing Attacks

Scammers and hackers have refined their art of convincing their victims to practically hand over their crypto wallet credentials to them. Scammers will create a fake website that will look and feel like a genuine website. Scammers will impersonate utilities, entertainment, financial institutes, and even a government website.

These websites are so real that even the best can be fooled; however, there is a method of verifying and authenticating the legitimacy of the said website.

Scammers and hackers will send an email, text, or message through various platforms and trigger a sense of fear and urgency in their victims. The body of the message would indicate that the recipient needs to contact them immediately, or their service will either be suspended for a prolonged period or terminated if the recipient does not act quickly. If the message comes from a government agency like the Internal Revenue Service or the IRS, they will threaten the recipient to pay quickly or face severe fees, life imprisonment, or both.

The body of the message also has a link, and on clicking it, the recipient will be directed to a webpage that looks legit. They would be encouraged to fill in all their sensitive crypto credentials.

All the sensitive data in the crypto users; accounts is collected by these con artists, and then they will use the same credentials to wipe clean the crypto holdings of their victims.

You must understand that most official mail is generally sent via postal mail, and even those who do use email and other messaging apps must refrain from clicking on the link or the contact number provided. Instead, you must go on to their official website, get in touch with the client service center, and ask about the entire episode.

You can thus refrain from falling for such crypto scams if you preserve and compose yourself instead of freaking out.

Ponzi Schemes and Pyramid Scam

Another widely popular way of scamming crypto users is through bogus investment scams. Scammers will convince their victims through a fake dream of making a substantial amount of money in a fake investment scheme that has no risk involved in it.

Ponzi schemes are based on the fact that James is robbed to pay Jake. As long as the pool of recruits is guaranteed, the entire scheme remains afloat. Once the pool dries up, the entire scheme falls like a pack of cards.

A pyramid scheme is similar to a Ponzi scheme but with a twist. Victims are promised fake incentives to recruit. With fake bonuses and special perks falsely assured, these victims go on to recruit new victims. Once the gag is up, victims not only lose their hard-earned cryptos, but there is also a rift in their family and friends as they too become part of the victims as they were recommended by them.

Pump and Dump Schemes

In recent years, both internet celebrities and entertainment celebrities have misled their audiences into;Pump and Dump Schemes.

These con artists will deliberately mislead their audience. They will buy bogus crypto in huge quantities, and then they will promote the same crypto to others. Since these celebrities have a huge fan base, they will believe them and also start to invest in them.

Since the crypto market also follows supply-and-demand law, the price of the said crypto begins to appreciate. Once the price has sufficiently appreciated, these scammers sell off all of their said crypto holdings, and thus their fans and audience are left with worthless crypto.

Social Engineering Tactics

Con artists rely on their victims to make a mistake, not through any software or electronic device errors but rather by enticing them emotionally. These scammers gain total control over their victims, and these victims, without realizing it, hand over all their financial assets to them.

They have such a hold over their victims that they will also put themselves at financial risk just to see that these scammers benefit. For online security in crypto, it is best that you do not share your crypto account and wallet details with any person that you have recently met online.

• Romance Scam: Scammers will entice their victims through fake confessions of love and will either ask them to invest in a bogus crypto investment scam or will create fake urgency to pay off never-ending medical treatment.

• Friend and family in need: Scammers will hack into their victims' social media accounts and will call their victims who are wrongly held in the custody of the law. They need money in the form of cryptos for their pay release. Most elderly citizens are targeted.

• Blackmail Scam: Scammers will encourage their victims to either be in a compromised position or download malicious software. Once their victims are caught in it, scammers will demand ransom in the form of cryptos to release them from their predicament.

Recognizing the Warning Signs

One of the best ways to ensure that you do not fall victim to such crypto scams is to keep your head cool and ask questions that might make sense of the entire situation around you.

When you are faced with a crypto investment opportunity, you need to ask the person who is providing such a service a lot of questions. If someone focuses only on the amount of money you will make at the end rather than concentrating on the actual business model, then it's a scam.

Every business has a certain amount of risk involved; as a thumb rule, the higher the profits, the higher the associated risk. There is no business in this world that will guarantee a substantial amount of money with no associated risk. If it is, then it's a scam.

If someone urges you to take money out of your emergency funds or recommends you apply for a personal loan to invest in a crypto scheme that they have, then you can be sure it's a scam.

When a social media influencer or a celebrity does not have the requisite financial background and credentials and starts suggesting investing in a specific crypto that you have never heard of before, then that celebrity is a scammer. These scammers are experts in crypto market manipulation.

There are no business models that guarantee to make profits by doubling your money in a short time.

Real-life Examples of Crypto Scammers

You may be surprised by the number of crypto celebrities; although many may be small-time scammers, here are a few who require recognition in the crypto scammers' wall of fame.

OneCoin

After much success with Bitcoin, Ruja Ignatova, sometimes referred to as Cryptoqueen, appeared in Bulgaria in 2014 with the promise of launching OneCoin, which was supposed to revolutionize the entire crypto industry and financial system.

It can be surprising that the scam was already recognized by the Bulgarian Financial Audit Commission, which had issued a warning regarding the same, but no one was interested in what later turned out to be a massive pyramid scheme.

Even the British print media had published many articles warning about Ruja Ignatova’s OneCoin scam, but eager investors failed to take heed.

In 2017, before the entire operation was deemed a scam, the "Cryptoqueen" went missing. To date, her whereabouts are unknown. However, her brother, who was also part of the management, along with several others, were arrested and sentenced according to the role they played in the scam.

Bitconnect

A notorious crypto lending platform, Bitconnect, was launched in 2016 and promised its users unrealistically high returns through lending programs. The entire operation turned out to be one huge Ponzi scheme, with its promoter, Carlos Matos, at its helm. His energetic and passionate speeches at Bitconnect events encouraged many to invent his platform. In early 2018, the entire scheme collapsed under its own weight, with many investors losing huge amounts of money.

The Paul Brothers

The famous boxers Jake Paul and Logan Paul have created financial trouble for their audience. Winning over them through podcasts, these part-time YouTubers have “pump and dump” and “rug pulled” their audiences.

Jake Paul has allegedly been involved in various “Pump and Dump” schemes, while his brother Logan Paul made a fake promise of creating non-fungible tokens, or NFTs, and failed to deliver what they promised.

These two brothers have not only made their name in the public domain but are also involved in shady business, using their name as a brand to scam their gullible audience.

The FTX

Several celebrities, right from the fashion industry to sports, were paid to endorse and influence many to invest in what is now a collapsed crypto trading exchange, the FTX.

Getting paid millions to falsely promote a crypto exchange that not only stole their users' money but was also tried in court for poor and deliberate financial mismanagement

Reporting Scams and Seeking Legal Recourse

It can be very frustrating, mentally, physically, and financially, to fall victim to a scam. However, there are ways to recover your lost assets. Since one way or another, scammers will reel you into a crypto-financial investment, you can follow these steps to recover from a crypto scam.

You need to recollect all the details that have been shared between you and the scammer and write them down. You need to include all the details, even those that you think should be kept from being mentioned.

These details should include:

• The name of the website and the URL
• Physical address and contact details that are mentioned on the website
• Any social media and messaging apps through which you were contacted
• Any messages, texts, and email conversations between you and the scammers
• Any charts, graphs, and screenshots provided by the scammer
• The wire account address and crypto wallet details of the scammer
• Your bank account number and crypto wallet address were used by you while transacting with the scammer.

Once you have made a detailed account of all the incidents, you need to take the steps below to recover your lost crypto assets.

• Visit your local law enforcement agency and file a complaint with them.
• If you are a US citizen, then file a complaint with the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC).
• If you are a resident of any other country, then try contacting your government authorities that deal with finance and fraud cases and lodge a complaint with them.
• Try contacting the Internet Crime Complaint Center (IC3) and providing them with all the details regarding the scam.
• Last, but not least, get in touch with your bank, whose services were used in the scam. Even contact your credit rating bureau and put a freeze on the credit cards that were used to transfer money from your account to the fraudulent investment scam. You can also ask for a free report and check for any unauthorized transactions.
• You can also use an attorney to file a case against the scammers involved in the scam.

Alternatively, you can also seek the services of financial fund recovery agencies. These are online recovery agencies that have the necessary financial expertise and technology to track down your lost crypto assets.

You can always seek help from Financial Money Recovery, a recovery firm that is a one-stop solution for all your financial fraud problems. They have the necessary human resources and a legal firm that will aid you in recovering your lost crypto assets.

They can even help you build a legal case if you wish to pursue it in court against the involved scammer.

A recap of the key points discussed in the blog

In this article, we have discussed why the cryptocurrency outlook is slowly but surely changing. Governments across the world are changing views and have even embraced the technology to issue their own variant of digital currency. However, the general population is recognizing the benefits of cryptocurrency and is adopting it.

We also saw why scammers and hackers are so interested in cryptocurrency and why the number of crypto scams is increasing. How they operate and how they target innocent crypto users.

We also dwelled on why it is important to safeguard your sensitive details and phishing prevention in cryptocurrency.

Later in the article, we also dwell on some examples and share a ray of hope for the victims of crypto fraud. We have also provided you with options to pursue your quest to recover lost crypto assets should you fall victim to any crypto-related fraud.

Empowering readers with knowledge and tools to protect themselves

Since we are not gifted with the power to handle our finances well, however, there are certain red flags to look out for that can save you when you encounter any crypto-related investment opportunities.

Scammers are known to play with words; they have a knack for enticing their victims by impersonating an expert financial advisor. If you encounter any of the following situations that are listed below, use caution and try not to entertain the conversation any further.

• When the opportunity is projected to be a lifetime investment.
• When the person on the other end describes and focuses on the amount of money they will make by investing in the proposed scheme,
• When the details of the workings of the financial system are not explained.
• When the person uses a lot of jargon and fails to explain it to you.
• The person wants to close the deal as quickly as possible.
• The person refrains from giving you time to think about or consult with your trusted few.
• When the person starts to use coercive language and high-pressure sales tactics.
• Due to a lack of funds, the person recommends you use your emergency funds, or retirement funds, or apply for a loan with the promise that you can replace those used funds with the amount of money you would be making after investing them in the proposed scheme. They may also convince you that with the amount of money you would be making, you would not require any emergency funds.

If you are interested in investing in any crypto-related investment or starting trading in a crypto market, then you should follow the steps that are provided below.

• Try to read as much as you can regarding cryptocurrency since there are several that are broadly classified. There are several useless coins too, so researching will guarantee that you can avoid falling victim to a crypto scam.
• Joining a crypto community would also help, as the white paper or a technical paper that represents the true purpose of the cryptocurrency can be understood. Thus, you do not need to be a software engineer to understand the true purpose of the coin.
• Getting used to crypto jargon will also prove helpful.
• If you are interested in crypto trading, then try to use your skills and trading strategies on demo accounts.
• While opening a crypto account, be sure that it is a reputed one. For any further information regarding it, you can always visit Financial Money Recovery. You can find extensive articles regarding prevalent scams and techniques to avoid falling prey. We also have articles on how to choose a legit crypto trading broker or brokerage firm.
• A crypto broker or brokerage firm offers you crypto trading online courses. They will teach you different trading techniques so you can find your trading style. They also teach how to research a cryptocurrency and how to spot opportunities while trading in the market.
• Do research regarding offline crypto wallets, as a crypto trading exchange can collapse, but at least your cryptos are safe with you.
• Online security for cryptos can be assured by the use of multi-factor authentication features, that will deter hackers and scammers from hacking into your crypto account.
• Last but not least, since the crypto market is a financial market, cryptocurrency prices face major fluctuation, and the chances of said crypto might change rapidly. Thus, invest the amount of money in the crypto market, which you may not regret losing.