FIVE ways to avoid being scammed when investing in crypto
According to a recent report by scams.info, young adults are the most likely demographic to invest in cryptocurrency, however, as the number of scams increases, they are also the group most likely to fall victim to fraudsters. We list six ways investors can safeguard their finances against crypto scammers.
#1 Research new digital currencies thoroughly
As new cryptocurrencies are entering the marketplace all the time, it's easy to be tempted when something looks as though it might be ‘the next big thing. Users should question new market entrants by finding out about the company and the platform, what the feedback is on social media, and if the currency has seen any genuine success. Check industry reviews and cross-check to ensure the company is not on the up-to-date fake cryptocurrency list.
#2 Ignore social media hype around new cryptos
According to scam.info, unsolicited opportunities often present themselves using buzzwords such as “guarantee”, “promise”, “free”, “easy”, “get-rich-quick”. However, they advise, “a basic rule of thumb when investing in crypto is; if it sounds too good to be true, it probably is a scam.”
Similarly, fraudsters will often use high-pressure tactics to get new victoms on board fast using promises of bonuses and discounts. Urgent payment requests are a huge red flag in the crypto world.
#3 Be wary of celebrity endorsements
The world of crypto is extremely volatile and celebrities as well as average folk are just as likely to fall victim to bad actors or unreliable exchanges. Just consider the recent FTX scandal, which saw Gisele Bundchen, Tom Brady and others, endorse the company, only to lose their investments. Use discretion, because even the most seemingly reputable and powerful platform could suffer a meltdown.
#4 Vet all online crypto platforms for authenticity
Scam.info points out that fake platforms look very similar to legitimate platforms, but with small discrepancies such as a slightly different domain name. They state, “It can be tricky to tell the real from the fake, therefore, entering personal details before stringent checks have taken place, could result in losing investments to scammers.
Securing digital wallets with private keys is also essential. Scam platforms often request that privacy keys should be shared. Scam.info states: “Wallet security varies depending on the type you’re using but it’s best to use a digital wallet that has been developed by a reputable company with a proven track record.”
#5 Opt for multi-factor identification security
They also advise using multi-factor identification and for users to avoid logging on through public Wifi. Regulations in the UK, currently make it likely that users will have their cryptocurrency returned to them should they be targeted by scammers. Any activity can also be reported to the Financial Conduct Authority.
Speaking about the new data and increased incidences of fraud in relation to cryptocurrency, Nicholas Crouch, spokesperson for Scams.info, advises, “Across the media, a rise in scams is being reported and we can see from our TikTok analysis that many people [many young people - taking into account TikTok’s demographic, with Exploding Topics reporting 47.4% of TikTok users are under 30] are falling victim to - or are concerned about - the scams that may affect them.”
Crouch says that this can include anything from concert ticket scams, a huge bone of contention as popular music acts, to competition scams, where many people are promised dream prizes such as property or cars in exchange for personal details or money.
He adds: “It’s important to stay alert to potential scams/scammers - always take the time to stop and think before proceeding and never feel too embarrassed to question something if it doesn’t feel or look right.”
