Analyses
12
Feb
crypto scams

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Cyptocurrency scams: How to protect yourself

Online scams related to cryptocurrencies have exploded in the 2020s. The increase in scams is directly related to the rise in the popularity of cryptos. Unfortunately, fraudsters target people worldwide, so nobody is safe from scams.

We have received many e-mails about crypto scams in recent years. Unfortunately, the e-mail is often received when the victim has already made a large deposit, and nothing more can be done to get the money back. You can always register the case with the police, but there is very little your local police department can do against globally running criminal networks.

If you suspect a service is a scam, you can always ask us for an opinion before depositing money! We have helped hundreds of people over the years for free.

Let’s mention one rule of thumb right at the beginning.

If you are contacted by an unknown person regarding investing, it is always a scam. Such contacts should be blocked immediately.

If people would follow this rule, most scams wouldn’t be successful.

This article describes typical online scams we have run across over the past years. Let’s begin with phishing.

Phishing

Phishing is the most common form of online scams. It is widespread across all financial services, not just cryptos. The idea of ​​phishing is to get the victim to log in to a service that looks real. Once the victim has logged in, the scammers can access his/her bank (or crypto) account and empty it.

Many contacts are made with elderly people via telephone. In such cases, the caller often represents himself as a bank support person. Banks cannot prevent outgoing transfers; in the worst case, the losses are tens or hundreds of thousands of euros. These can be devastating for older people.

With cryptos, phishing attempts are mainly done via e-mail, social media, and Google. Let’s examine these in more detail.

E-mails

E-mails are the most common form of phishing. Fortunately, large service providers like Google and Hotmail block about 99 percent of them in the spam folder. However, some of the messages get through and may seem genuine initially.

Phishing e-mails attempt to lure the victim into taking prompt action by

  • Intimidation: A message comes from a crypto exchange threatening to close your account if you don’t act immediately.
  • Reward: You must act quickly to claim the reward or release the locked cryptocurrencies in your name.

Such messages are usually recognized as scams by looking at the name of the sending domain. Instead of using official domains such as binance.com or coinbase.com, the scammers use domains like binancee.net or co1nbas3.com. However, this does not always work, as the sender’s address can be masked as something different.

Below is a picture from Wikipedia of a scam message sent in the name of Nordea Bank. The sender’s domain seems to be the official Nordea.fi.

nordea mail

 

The best way to protect yourself from e-mail phishing attempts is to never click on e-mail links related to banks, insurance companies, crypto exchanges, and other important services. If you think you receive a genuine message from the bank or crypto exchange you use, log into the service directly via the mobile app or website and check what the situation is.

Sometimes, you have to click on email links. This need often arises during registration when you are asked to confirm your email address. Be careful even in these situations.

Social media

Phishing on social media is usually related to hijacking a social media account. The criminals then post a message to lure victims to a phishing site: “Click here to get x amount of cryptocurrency for free.”

Although many users doubt the message’s authenticity, some will be fooled because it is sent from an official channel. However, this is no proof of authenticity! Social media accounts are constantly hijacked for precisely these purposes.

These scams are often related to MetaMask or similar Web3 wallets, where you must grant access to a specific smart contract to receive a reward. Once the permissions are granted, criminals can empty your wallet’s contents.

Below is an image of Ethereum founder Vitalik Buterin’s X account, which was hijacked in 2023. The criminals immediately made a genuine-looking post. If the victim clicked on it, he gave the criminals access to his wallet.

vitalik buterin x hack

If you want to participate in contests or sweepstakes, do it with a separate wallet where you don’t store any cryptocurrency.

Telegram, Discord, and Twitter (X) are constantly spammed with various scam links. These links often advertise a competition or a service offering exceptional returns. You should never click any crypto-related links on social media where you are asked to grant access to your wallet.

Google

Google scams are so dangerous that even industry professionals fall for them. These are often related to a specific app or service. Criminals buy advertising from Google, so a person doing a Google search can mistakenly click on the topmost ad instead of the search result.

The operating logic is similar to social media scams. In the world of cryptos, it’s often about DeFi apps. The victim opens a genuine service and connects his wallet to a smart contract, after which the criminals can empty its contents.

The best way to protect yourself from such scams is never to click on Google advertising links. It is almost impossible for fraudsters to get a fake website to the first place in search results.

It is also smart to save essential services (online banking, crypto exchanges, DeFi applications, etc.) as browser bookmarks and access them through that.

Trading platforms

One of the most common crypto-related scams is various trading platforms. These are problematic for the victims, as an inexperienced investor can easily mistake the service for genuine.

The idea behind such scams is as follows. Criminals create a genuine-looking trading platform where the victim is asked to log in and deposit money. The victim is lured into the service by promising exceptional returns, for example, 1–10 percent daily. The returns come supposedly from a trading algorithm, trading robot, or similar.

People today question the legitimacy of such returns, as they should. However, criminals have an effective antidote for this: they let the victim do one (or even more) test withdrawals first. When victims think the service is reliable, they make a large deposit, which the criminals take for themselves.

You can recognize trading platform scams by three main features:

  1. You get a recommendation for the service online and often from an unknown person.
  2. The service promises exceptional returns with the help of a trading robot or similar.
  3. The pages on the platform’s website’s contact information, FAQ, information about us, privacy settings, etc., are incomplete.

The best way to protect yourself from these scams is to remember the rule of thumb mentioned at the beginning: If you receive an online contact from an unknown person about investing, it is always a scam. Such contacts should be blocked immediately.

No one accidentally comes across these trading platforms, but the victims end up there through recommendations.

An important point regarding withdrawals

This advice applies especially to trading platforms, but this problem can also be encountered with other scams. At the point when the victim wants to withdraw the significant winnings (which in reality do not exist), the scammers try to squeeze out even more money. This is often done with the following requirements:

  • You are being told to pay taxes on the profits made
  • A withdrawal fee must be paid for “releasing the locked funds on the blockchain.”
  • Insurance payment or something similar

Since the victim thinks he has made significant profits, such fees are (unfortunately) often paid. These can be thousands of euros or even tens of thousands. The problem is, however, that one demand is followed by another, and the third, and so on. The victim usually realizes that the money cannot be withdrawn.

If you send money to the scammers during the withdrawal phase, hoping they will return your investment, you will also lose those funds. Unfortunately.

Binance scam

Let’s say an essential clarification at the beginning: Binance is the world’s leading cryptocurrency exchange and serves more than 120 million customers. Binance is not a scam.

Cybercriminals impersonate Binance because the company’s brand is so well known. Victims have no way to verify whether or not the person is actually on Binance’s payroll, so Binance’s brand lends credibility to the scammers.

Many kinds of scams can be done in the name of Binance. At the moment, WhatsApp groups are popular. You will be added to a group maintained by a Binance representative (i.e., a scammer), which often has dozens (or a couple of hundred) people. Scammers make groups for each country to make them look legit.

Below is an example of a Binance group on WhatsApp created by scammers.

binance whatsapp

After some time, the representative of Binance (i.e., the scammer) starts telling you about a new service, DeFi investing, mining, or something similar that offers extraordinary returns. The more money you deposit, the more returns you get.

Many victims join for the same reason as in the trading above platform scam: significant returns and a legit-looking service that might initially process several withdrawals. However, you will lose all your funds if you make a larger deposit.

The best way to protect yourself from this kind of scam is to turn on the settings in WhatsApp so that you cannot be added to any group without asking. Sometimes, the contacts may also come as direct messages on social media, or you may receive a phone call.

Remember the previously mentioned rule of thumb: if you receive a contact regarding investing online, especially from a foreigner, it is always a scam. Don’t even start chatting with such people – block them. Also, don’t answer phone calls from strange numbers if you don’t need to do that for your profession (entrepreneurs).

Binance account “with a helper”

Another type of scam is associated with Binance. Older people, in particular, have been contacted and offered help opening a Binance account. This “helper” says he will guide you on investing in cryptocurrencies and help you create a Binance account.

The victim is often inexperienced with cryptos and has no experience with the real Binance exchange. Likely, victims are often redirected to a fake site, and this scam is thus similar to the trading platform scam mentioned above.

The “assistant” advises how the victim can deposit money into the service and start making money. As a result, the victim loses their deposits because the investments can never be repatriated.

You protect yourself from this scam again by remembering the rule of thumb that has already been stated several times. If someone contacts you about investing (especially if it’s a foreign person), it’s a scam. Never open accounts on any service with the help of others.

Exodus and Trust Wallet scams

Exodus and Trust Wallet are two of the most popular cryptocurrency wallets on the market. Both are reliable and secure applications. Cybercriminals exploit these brands for the same reason as they exploit Binance.

We have received several e-mails regarding Exodus and Trust Wallet scams, but we don’t have detailed information on how such scams work. In our opinion, it is a combination of the aforementioned types of scams.

There is a “helper” who advises how to open an Exodus or Trust Wallet wallet. He can direct the victim to a fake application or assist in opening the wallet so that he can get the victim’s private keys. When the victim deposits money into the wallet, the scammer will empty its contents.

There are at least a few known cases in which the scammer who was contacted has appeared, e.g., as a representative of Trust Wallet support. Some contacts have also been made via WhatsApp.

Never install any crypto-related apps with the help of others. Even if it’s a genuine-feeling person.

Fraudsters promising to return your lost funds

Even if you have been the victim of a crypto scam, the danger is not over yet. You can get scammed again – even by the same people! In such a case, a scammer says he can return the money you lost earlier.

Unfortunately, this scam works well because many victims have lost large sums of money and are desperate to regain it. If someone promises to return the money, it may be difficult for the victim to resist such an offer. However, this is a new scam where the victim is cleaned from any remaining funds he or she has left.

It’s good to use common sense again and think about how crypto scams work. We are not looking for a stolen bicycle and knocking on the doors of a few local criminals. Crypto scams are global scams with operators in different parts of the world. Tracking down these parties doesn’t just happen like that.

global

Even if the transfers can be traced to a crypto exchange, only the authorities can get personal data. An individual “internet detective” has no authority to obtain information that would allow the funds to be returned.

Not to mention that this “internet detective” could call the scammer and ask him to return your money; only the authorities and their specialized cybercrime units can seize stolen funds. Even in these cases, it’s usually billion-dollar scams that are investigated for years. The authorities do not have the resources to start tracing the losses of a single person. Unfortunately.

These scams probably work in such a way that the scammers forward the information of the scammed persons to the parties responsible for the “return scam.” Thus, they have a ready contact list of people who have recently lost money. You may receive contact about the refund a few months after the original scam.

In addition, victims search for companies promising refunds on Google and stumble upon them that way.

It is very important to learn from scams and avoid making the same mistakes again! Be careful and trust no one who contacts you online and you don’t personally know.

AboutBitcoin Team

Hey! We're the AboutBitcoin squad, a team of crypto lovers who've been all about cryptocurrency since 2017. Every week, we drop the latest news and cool insights from the crypto world. Come hang with us as we dive into the crazy, ever-changing scene of cryptocurrencies – it's gonna be an awesome adventure!