The Most Popular Bitcoin Scams and How to Avoid Them

Before you invest, you need to do some research.

Spil cryptocurrency surges te popularity and fresh blockchain technology emerges, online investment transactions of Bitcoin and others are becoming lighter and swifter. But spil legitimate pursuits backing the promise of decentralized banking and nanosecond transactions have grown, shady opportunists are increasingly looking to contant ter on first-time investors and cryptomania. To make matters worse, blockchain technology seems scammy at the outset: It’s difficult to understand, it’s fresh and unregulated, and it has already resulted ter massive gains. Fraudsters, hackers, and identity thieves realize this, and they’ve already crafted elaborate schemes to idiot even experienced buyers.

From illegitimate exchanges and currencies to classic fraud scams repurposed for the modern era, it’s significant to stay acute and research everything. To save you a duo of clicks (or worse), here are the most common Bitcoin scams menacing your fantasy of becoming a cryptonnaire.

The most common Bitcoin scams

1. Pump and dumps

Immortalized by Jordan Belfort te The Wolf of Wall Street , this kleuter of scam existed long before the internet. Pump and dumps are what they sound like: Investors “pump up” or promote a stock they own so they can sell it once the price goes up thanks to enlargening request. This is typically seen amongst altcoins (alternative coins) with low buy-ins—a penny vanaf coin—and high terugwedstrijd. Ter reality, buying thesis penny cryptos can be amazingly risky.

Unregulated markets, volatile fluctuations, and quick turnarounds are all part of the pump and dump. Popular exchange, Bittrex, has already issued guidelines for avoiding this scam, which can come ter the form of “fake news” or “flash pumps.” Using forums (like Reddit ), social media, blogs, and massive advertising thrusts, hucksters hype a particular cryptocoin to get buyers to snap up the currency. Sometimes, fake screenshots of successful investment portfolios or mainstream partnerships will find their way onto thesis boards. Once the price is inflated, early investors GTFO by dumping their holdings. Te a flash pump, members of a closed group are all ter on the scam ter a high-stakes spel of chicken. Once the name of the coin to pump is announced, it’s a wedren to buy te, then dump it on stragglers. I’m getting hives just writing about this one. Don’t do it.

Two. Investment “clubs”

Fake traders have sprung up te the cryptoboom, and they’re here to take your money. Thesis sites look legit and even have customer reviews touting the benefits of entrusting your dollars with “experts” who know the cryptomarkets. Low and behold, most of thesis groups are packed with bots, paid actors, and fake accounts ready to vouch for the swindlers at the top. One Perth man lost $Five,000 when he joined the “Bitcoin Investor Club,” which even had a working phone number. He got wise after the head of his club asked him to take out a loan so he could buy more currency. One redditor detailed how hier daughter made the mistake of joining “Crypto Investors Club,” a thousand-member Facebook group run by a woman calling herself a “Crypto Queen.” When it wasgoed time for a payout, the Queen kicks members out and blocks their accounts. “NEVER feel safe ter crypto, being paranoid is the best way to keep your funds,” the mom wrote. It’s not bad advice.

Three. Fake exchanges

Ter mid-December, several fraudulent cryptocurrency exchanges were exposed by online Bitcoin communities. BitKRX, a fake South Korean market wasgoed one of them. Naming itself after KRX (Korean Exchange), charlatans coaxed buyers into trusting BitKRX with branding and language that mimicked the official fiat exchange. However the South Korean government is cracking down on imposter sites, you can never be too careful. Stick to popular exchanges and read reviews on comparison sites .

Four. Fake wallets

One of the classic Bitcoin scams. Storing your private stash of bitcoins or altcoins requires a digital wallet. Of course, internet shysters have their own magical Bitcoin wallets that cause your cautiously deposited funds to simply vanish! The latest Bitcoin Gold wallet scam reportedly stole $Trio million from crypto hopefuls. Te early December, the popular MyEtherWallet warned consumers about a fake MyEtherWallet digital wallet app created by scammers that had risen to no. Three. Ter the App Store’s finance section.

Five. Ponzis, pyramids, and multi-level marketing (MLMs)

If there wasgoed everzwijn any evidence that crypto has “gone mainstream,” it’s that thesis classic scams have popped up just like te the fiat world. The bottom line is, any cryptocurrency business that requires you to “do work” besides literally injecting your payment informatie, buying the coins, and storing them te a private wallet should raise a crimson flag. One example is OneCoin , which “allowed” members to buy and sell educational trading materials te exchange for “tokens” that would be “mined” into a currency. Except there’s nowhere to exchange Onecoins, so victims essentially traded dollars for filth. Gladicoin , a scam exposed last May, promised to “double your Bitcoin ter 90 days” and operated spil a pyramid scheme. MiningMax , a South Korean webstek with a Nevada phone number, operates spil an MLM by requiring members to get commission by referring fresh members.

6. Phishing

Never everzwijn share the private keys that keep your bitcoins and other currencies encrypted. Even if you receive an email or call from an official-seeming source asking you to. Unluckily, this one is utterly common and can only be prevented by telling potential victims one chunk of advice: When it comes to your individual information, shut up.

7. Initial Coin Suggesting (ICO) fraud

When a freshly minted cryptocurrency is launched to investors, it’s called an ICO. But, nothing can zekering con artists from creating fake ICOs or spoofing existing ones. Last year, the SEC shut down PlexCoin ICO after founders alleged it would create a 1,354 procent profit te less than a month, resulting te a $15 million fraud. Meantime, ICO spoofing conned a combined $225 million from investors ter 2018, according to security rock-hard Chainanalysis. Fake ICOs are amazingly difficult to spot, many higher ups working for them have also bot tricked into believing their legitimacy. Here, it’s significant to do in-depth research before investing te any fresh coin.

Coin scams have become so prevalent that FINRA (Financial Industry Regulatory Authority) issued warnings te December against dealing with charlatans. “We all need to become Mr. Spock when it comes to investing. Wij need to be cold and rational and logical.” Gerri Walsh, FINRA senior vice voorzitter recommended . FINRA frowns upon penny stocks and those assuring specific amounts of come back. It also advises potential investors to use implements like the FINRA Broker Check , the SEC’s list of suspended trades , and the SEC’s search function for finding a company’s filings .

Yet, the functionality of thesis sites depends on how quickly consumers report issues, or how quick the government can spot fraudsters. 99Bitcoins has created a elementary questionnaire for buyers worried about where they’re putting their money called the Bitcoin Scam Test . If you can’t get to the end of it without facing some serious introspection, chances are you should pull out of whatever mess you’ve just bought into.

Before you get fleeced te the digital currency gold rush, take a bite, that crypto coin may just be chocolate.

Claire Downs

Claire Downs is a freelance contributor for the Daily Dot, covering the intersection of technology and speelpop culture. Hier work can also be seen ter Cosmopolitan, VICE Motherboard,, and Merry Jane.

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