As the popularity of cryptocurrency grows, so has the risk of cryptocurrency fraud with criminals and con-artists seeing this unregulated world as a way to target people.
Carey van Vlaanderen ESET SA’s CEO urges people to ensure that they know how to recognise cryptocurrency schemes that are targeting South Africans.
Why are cryptocurrency scams on the rise?
Fraudsters use current events such as the hype around cryptocurrency to trick their victims.
Below are some of the reasons that have contributed to in the rise in cryptocurrency scams:
- Little to none regulations governing the cryptocurrency market for investors
- Huge media interest in cryptocurrency making it a regular hook for scams
- High cryptocurrency prices that attract consumers who dream of getting rich quick
- Cryptocurrency trending on social media
- The lure of mining coins for money are used by phishers as a hook
What are the most common cryptocurrency scams?
The Ponzi scheme
A Ponzi scheme is a type of investment scam where victims are tricked into investing in a “get rich quick scheme” that is lining the pockets of the fraudster.
Phishing scams make emails, texts and social media messages appear to come from a legitimate source with an urgent request for payment in cryptocurrency.
Scammers set up mock trading platforms that replicate legitimate ones to lure unsuspecting victims.
Pump and dump
Scammers encourage investors to buy shares in cryptocurrency companies under false pretences. The share price rises and the fraudster makes a profit by selling their shares while the investor is left with worthless stocks or coins.
Fake celebrity endorsements:
Scammers hijack the social media accounts of celebrities or create fake celebrity profiles and encourage followers to invest in fake schemes
Cyber criminals create spoofs of legitimate cryptocurrency apps and upload them to app stores. Once a person installs the spoof app, it steals personal and financial details or implants malware.
Fake and copycat exchanges:
Fraudsters contact people through emails or on social media and promise access to virtual cash stored in cryptocurrency exchanges but the user must pay a fee first.
How you can avoid falling victim
Although cryptocurrency scams are on the rise, you can use these tips to avoid them:
- Never provide your personal details to an entity that makes unsolicited contact with you.
- If something is too good to be true it usually is so take any investment scheme with a heavy pinch of salt
- Switch on the two-factor authentication system for any of your cryptocurrency accounts
- Never engage with an investment scheme that requires an up-front payment
- Never use unofficial app stores
- Download anti-malware software from a reputable provider