More people are attempting to make money from cryptocurrencies in the rush for digital gold on daily basis. The number of criminals and con artists has also surged as a result of insatiable cryptocurrency demand. The world seems to have gone ‘crypto-mad’.
Digital currencies like bitcoin, Monero, Ethereum, and even Dogecoin’s popularity is increasing day by day. Their soaring value promises big wins for investors. Unfortunately, scammers seem to be two or more steps ahead of most cryptocurrency enthusiasts. The seamless breeding of cryptocurrency scammers is a consequence of the unregulated nature of cryptocurrencies.
Cryptocurrency scams in South Africa
In 2021, South African-based Africrypt was reportedly hacked. Hackers wiped out a staggering $3.38 billion of investors’ money from Africrypt.
While the apparent hack made global headlines, the founders(two brothers) of Africrypt vanished as international investigators struggle to establish what happened. The elder brother Ameer Cajee informed clients that the company was the victim of a hack. He asked them not to report the incident to authorities as it would slow down the recovery process of the missing funds.
It is now suspected to be a completely fraudulent cryptocurrency investment platform where the founders vanished about 69,000 coins following the surge in Bitcoin’s value in 2020.
Cryptocurrency scams are in the rise since there are few if any regulations governing the cryptocurrency market for investors. Soaring cryptocurrency prices also attract consumers dreaming of getting rich quickly. Such consumers become an ideal target for the scammers.
Finally, there’s also the lure of mining coins for money which phishers can use as a hook.
Common cryptocurrency scams
Here are some of the most common scams:
Pump and dump: Scammers encourage investors to buy shares in little-known cryptocurrency companies, based on false information. The share price subsequently rises and the fraudster sells their own shares, making a tidy profit and leaving the victim with worthless stocks or coins.
Fake celebrity endorsements: Scammers hijack celebrity social media accounts or create fake ones, and encourage followers to invest in fake schemes like the ones above. In a recent ploy, some $2m was lost to scammers who even name-dropped Elon Musk into a Bitcoin address in order to make the ruse more trustworthy.
Ponzi schemes: This is a type of investment scam where victims are tricked into investing in a non-existent company. In most cases it is a get rich quick scheme. Cryptocurrency is ideal for this as fraudsters are always inventing new, unspecified ‘cutting edge’ technology to attract investors and generate larger virtual profits. Falsifying the data is easy when the currency is virtual anyway.
Fake and copycat exchanges: Fraudsters send emails or post social media messages promising access to virtual cash stored in cryptocurrency exchanges. The only catch is the user must usually pay a small fee first. The exchange doesn’t exist and their money is lost forever. Copycat sites offer what appears to be legitimate wallet services. Users are encouraged to download wallets which then install malware on the user’s device. In these instances, iOS devices have been compromised where in the past the problem was limited to Android.
Phishing: Phishing is one of the most popular social engineering techniques scammers use. Emails, text and social media messages are spoofed to appear as if sent from a legitimate and trusted source. It usually has an urgent request for payment in cryptocurrency.
How to avoid falling a victim
- Never provide your personal details to an entity that makes unsolicited contact with you, via email, text, or social media. It may even appear to be your friend. However, in reality could be a hacker who has hijacked their email or social account. Check with them separately via another contact method
- If something is too good to be true it usually is. Take any investment scheme with a heavy pinch of salt
- Switch on two-factor authentication for any cryptocurrency account you have
- Dismiss any investment ‘opportunity’ which requires an up-front payment
- Never use unofficial app stores
- Download anti-malware software from a reputable provider to your PC and mobile devices
Don’t believe the hype, or buy into something that seems too good to be true, and you’ll stand a great chance of staying safe.