Don't Let Cryptocurrency Scams Cost You
2 min read
Scammers are always looking for new opportunities to line their pockets. Their latest target is cryptocurrency investing. Many people are attracted to the possibility of earning a substantial return in a short time. And since virtual currency platforms have little regulatory oversight, criminals are ramping up their efforts to steal money from unsuspecting investors.
Here's what you should know about cryptocurrency investment scams.
What Is a Cryptocurrency Investment Scam?
A cryptocurrency investment scam occurs when misleading claims are used to steal digital currency. Once crooks have the money, they typically vanish and leave the investor with no means to recover the funds.
Signs of a Cryptocurrency Investment Scam
Not every cryptocurrency investment opportunity is a scam, but the ones that are can drain your digital wallet. Stay alert to these red-flag scenarios that could signal a scammer is searching for their next victim:
Someone you met online is asking for your virtual wallet passcode or login to help you invest in a limited-time opportunity.
Celebrity testimonials pop up in your social media feed that encourage investing in a specific digital currency.
An urgent message arrives via email or text alerting you to a hot cryptocurrency investment tip.
A company is paying investors reward points they can redeem for cryptocurrency once they refer a minimum number of people to a specific currency.
Your request for more information about an investment are ignored, or you're redirected to a third-party website for answers.
Social media or online ads that guarantee a specific return on your investment.
Criminals use a variety of nasty tactics to convince you to act fast and invest heavily.
Protect Yourself from Cryptocurrency Investment Scams
Cryptocurrency investing can provide higher returns than other, more traditional products, but that's not without risk. Here are a few ways to keep your crypto wallet safe from scammers:
Research multiple digital currency options instead of purchasing based on market hype or social media buzz.
Read the fine print of all virtual currency platform agreements. They may be of little help in recovering funds if you send cryptocurrency to a scammer.
Avoid crypto traders who promise guaranteed returns for investing in digital currency. While savvy investors can profit by trading cryptocurrencies, the market is too volatile to guarantee how much an investor will make.
Steer clear of cryptocurrency individual retirement accounts (IRAs) that claim to be IRS approved. While you can use an IRA to invest in digital currencies, none are approved by the IRS.
Only invest what you can afford to lose. Fraudsters will encourage you to invest more money than you have with the promise of guaranteed profits.
Prepare yourself emotionally since the crypto market experiences extreme highs and lows in a short timeframe.
If you've lost money to a cryptocurrency scam, alert the cryptocurrency exchange platform that facilitated the transaction. You can also report the incident to the Federal Trade Commission and the Commodity Futures Trading Commission. These government agencies work to alert the public about these and other fraud schemes.