The Most Common Scams In The Crypto Space

As cryptocurrencies have gained more and more popularity and the crypto community has grown, so have cyber attacks by hackers and other malicious actors. The latter try in every possible way to discover vulnerabilities, both in human behavior and in the technologies and tools used.

The last 5-6 years have seen a real explosion of frauds in the crypto environment, which have caused billions of dollars in damage to exchanges and ordinary users.

In the following we will present you some fraud methods that are used and we will offer you some pro tips (professional advice) to help you counter them:

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1. Phishing attacks

IMPORTANT: These attacks are only possible due to human errors.

During such an attack, the malicious actor impersonates a credible person or organization (eg: Elon Musk, Apple, JP Morgan, etc.) and tries to trick the victim into revealing confidential information, which would guarantee access to their funds . The messages designed by the attacker usually convey a sense of urgency - "You have to do x thing, otherwise you will lose access to your account, etc."

Attacks of this type are difficult to identify, as they take very different forms. They use any form of communication – phone calls, sms, ads, emails, fake URLs, sites that closely imitate other sites, etc. In some cases, attackers will pretend to be a representative from your bank or a trusted company and ask you for confidential data.

TIP:

Be careful who you interact with online. Carefully verify the authenticity of any contact who will send an email, any URL, etc. Also use multiple forms of authentication: 2FA, SMS, etc. to increase your security. It is better to be more cautious and not to be the case, than vice versa, to be careless and it may even cost you the agony of a life.

2. Ponzi schemes

Known as 'pyramid schemes', these are fraudulent enterprises that involve convincing other people to join the activity. These scams depend on a continuous influx of new users (the base of the pyramid) to support those at the top. Victims are, as a rule, attracted by the promise of substantial earnings, a luxurious lifestyle, the acquisition of a privileged status in the respective organization.

These schemes usually end either when the initiators have collected an amount that satisfies them and exit, or when they can no longer attract new users and then the whole scheme collapses like dominoes.

TIP:

Fortunately, these schemes are relatively easy to spot. Any promise of a big, guaranteed win should make you look at things with a healthy dose of skepticism. Even if it's recommended to you by a friend, don't fall into the trap of jumping on the bandwagon, but do your research first.

3. Pump & Dump Schemes

A Pump & Dump scheme involves a group coordinating the artificial increase in the price of an asset (in this case, a cryptocurrency) in order to attract other investors, and then selling that asset to them at a high price, leading to a massive and immediate crash in its price. Even though the SEC and other institutions qualify these acts as fraud, they have continued to thrive in the crypto environment, especially on unregulated exchanges.

TIP:

Try to look at any project that is in the hype phase with a critical eye and from multiple angles, and also pay attention to who is promoting it and how.

In conclusion, remember that your vigilance and caution are your first and most important line of defense .

To increase the chances of securing the funds, and implicitly, the accounts on the platforms where we operate, read the following articles:

• Anonymity and pseudo-anonymity in crypto

• How to identify a crypto exchange that is a counterfeit