Bitcoin and other cryptocurrencies are becoming more popular, but crypto scams are also growing at a fast pace. The high-profile $1.5 billion bitcoin purchase by Tesla CEO Elon Musk not only made headlines, but it moved the bitcoin market and increased the buzz about digital currencies. However, the number of cryptocurrency scams has also increased 40% since 2019, and according to the findings of a Bolster report, is excepted to rise 75% in 2021.
Consumers are faced with the dilemma of how to benefit from the rising popularity of cryptocurrency and get ahead of a trend while staying safe from ruinous and crypto scams.
The Trader Defense Advisory team is comprised of professionals who have vast experience helping consumers avoid and recover from a variety of scams, including crypto scams. We consult with clients and can offer a variety of avenues for fund recovery, including intelligence reports, advocacy, chargebacks, and wire recall. We deal with crypto scams as well as reporting fraudulent brokers and can help your case succeed.
How Quickly Are Crypto Scams Increasing?
Crypto scams began as soon as bitcoin premiered in 2009. Although many regulators around the world took steps to raise awareness about cryptocurrency fraud and to activate law enforcement, those who perpetrate crypto scams, like hackers, continuously upgrade their tools and techniques.
As bitcoin is increasingly offered as a payment option on many websites and new types of cryptocurrency are developed, fraudulent crypto offerings, investments, and products are also appearing. There were over 400,000 crypto scams created in 2020 alone and the number is expected to rise.
According to a Bolster Report, which surveyed 300 million websites to see which were either affected or used in crypto scams, the number of fraudulent cryptocurrency schemes is expected to increase by 75% in 2021. Another sobering fact is that Investopedia has found that 80% of ICO or Initial Coin Offerings are scams.
Why Are There So Many Crypto Scams?
There are several reasons for a large number of crypto scams. First, anything new and hot will attract unscrupulous parties who want to benefit from the trend. As soon as a type of shoe becomes all the rage, it isn’t uncommon to see people selling knock-off brands on the street, like the people who sell fake Gucci handbags or knock-off switch watches. S
Since marketing began, for every good idea or invention, there have been people ready to provide a fake version. It stands to reason that as digital currencies become more popular, there are bound to be more bitcoin scams and other types of cryptocurrency fraud.
The second factor is the anonymity provided by digital currency. Although transactions are tracked on the blockchain, the people making the purchases are often not traced or identified clearly. This can provide an opportunity for cybercriminals to abscond with ill-gotten gains and launder money.
Third, many new products, including digital currency, involve elevated expectations combined with a lack of specific knowledge. People are excited about the new financial horizons provided by cryptocurrency. They may be fooled by overly rosy language and extravagant promises from crypto scammers.
Since it can be a challenge to understand how bitcoin and other cryptocurrencies work at first, scammers use this lack of knowledge and clients’ hope as a way to fool them out of their funds.
The fourth factor is desperation. The Covid-19 crisis left many people out of work or under-earning. People are desperate for a way to make more money and maybe more easily duped by crypto scams than they would under ordinary circumstances.
In addition, the pandemic has given people more time to sit in front of the computer look at get rich quick schemes online. This has created a larger market for scams.
How Can I Stay Safe from Crypto Scams?
Learning to be skeptical and recognize prospective crypto scams is a huge step towards staying safe. The old adage, “if it is too good to be true, it probably is,” is good to keep in mind before signing up for any kind of bitcoin trading scheme or crypto product. It is always important to remember the following:
- Always ask questions and never trust any service completely
- Find out the background of the broker or the company offering bitcoin products
- Do not give your bitcoin information anyway to anyone
- If you are investing in an ICO, only use trusted platforms
- Validate the reliability of all websites and companies before purchasing crypto wallets or apps.
Of course, cryptocurrency is new and you can’t expect a broker or a company to have decades of experience in an industry that didn’t exist before 2009, but every crypto product, brokerage, or company has what they call in the financial industry, “bloodlines.” These refer to the experience of the people behind the operation. Every investor should research carefully who is in charge, what their experience is, what activities they have been involved in in the past.
Do not be quick to give away your data, click on links or offer private crypto information. Many crypto scams are a front for identity theft. Losing the bitcoin in your digital wallet is bad enough, but when they gain access to your data, your financial health could be threatened.
Follow your gut feeling if you do not feel a crypto service is reliable, and when in doubt, stay away. Ask questions and if something happens, make a complaint and seek the guidance of Trader Defense Advisory.
About Trader Defense Advisory
Trader Defense Advisory professionals are well-versed in the process of reporting fraudulent brokers, crypto scams and identity theft. They help clients individually through the procedure of filing a claim and reporting their case to the authorities. TDA experts have combined decades of experience with banks and financial regulators that can track down the fraudulent parties and help clients recover from identity theft and other types of fraud. We have a proven track record of success in assisting clients with winning claims and helping clients reclaim their identity.