For years, bad actors have been using social media platforms to lure innocent investors into scams. To understand how you can identify and avoid such traps, continue reading this article.
Crypto Social Media Scams
With billions of people now able to access various social media platforms, thanks to the availability of the Internet, these platforms have become a fertile arena for scammers to reach out to their targets. According to the United States Federal Trade Commission, crypto investors have lost over $1 billion to fraudsters since the start of 2022, with most of the scams starting with an advertisement on social media platforms.
The different types of crypto social media scams include:
These scams involve creators of a particular crypto token artificially inflating its price and then selling their holdings once the token reaches a certain high price. Such projects are usually promoted on social media platforms, sometimes by popular influencers.
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For example, reality TV star Kim Kardashian promoted EthereumMax a few years ago, only for the creators to dump their tokens on investors. Following her involvement in the crypto project, Kardashian was charged by the US Securities and Exchange Commission and directed to pay an undisclosed penalty fee to settle her charges.
Fake Verification Ticks
Most people believe that social media accounts with blue verification ticks are trustworthy, but this is far from the truth. Most scammers are now paying to get their accounts verified and use them to promote their fraudulent crypto projects. They even share phishing links, which, when opened, could cause you to lose your funds.
In recent months, scammers have been creating clone versions of legitimate crypto apps. So, when crypto users install the malware and then deposit funds, they end up losing their crypto assets.
Last year, the FBI reported that cybercriminals used their scam apps to steal over $40 million from American crypto investors. That said, it is important to evaluate the legitimacy of any crypto app before downloading it.
Also known as pig butchering, romance scams have become popular in recent years. They usually start on social media platforms, where scammers aim to develop trust with victims by conversing with them on a regular basis. The fraudsters mostly pose as established traders, promising high guaranteed returns. As the victims’ trust in the scammers continues to grow, they make more investments. Little do they know that the fraudsters are slowly robbing them.
Per the FBI’s 2022 report, American crypto investors collectively lost $420 million through romance scams.
To avoid falling victim to such scams, it is essential to conduct thorough research on the investment opportunities offered by strangers. Moreover, avoid investing in any project that promises guaranteed returns.
How to Identify a Scam Crypto Project
Fake Celebrity Endorsements: Some scammers have the tendency to share fake images of celebrities who allegedly support their crypto projects. That said, visit the celebrities’ social media accounts to find out if they are also promoting the projects. If not, consider that a red flag.
Spotting Fake Crypto Apps: If an app on a reputable store like Play Store or App Store claims to be of an established brand but only has a few downloads, then that should be a red flag.
How Do You Stay Safe?
Use a Hardware Wallet: Scammers cannot access your cryptocurrencies when you store them offline. Therefore, it is advisable to get yourself a reliable hardware wallet for maintaining your digital assets.
Use Multi-Signature Wallets: Another way to protect your cryptocurrencies is by using wallets requiring several parties to approve transactions.
Smart Contract Audits: External audits on smart contracts are necessary to help crypto investors become aware of the vulnerabilities in a crypto project’s code. Therefore, avoid projects that have not conducted an external audit.
Investing in a highly unregulated industry demands you carefully scrutinise all projects before committing funds. We hope this guide will help you to maneuver the crypto space safely.
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