It’s a new year and new opportunities are around. The crypto market continues to evolve and the technology can be found in more industries now than ever. With all of this growth, there are some negatives including an influx of scammers. These individuals seek to try and separate you from your hard-earned crypto using any means necessary. Here are the crypto scams to look out for in 2023 and how you can avoid them.
Why so many Scammers?
There are so many scammers in the market because it’s a new technology that deals with a lot of users who don’t fully understand its capabilities or inner workings. Whenever you have a gap in understanding there is room for scammers to move in. New traders are often caught up in the excitement of the fast-paced market and stories of people securing life-changing returns via cryptocurrencies.
Sadly, this approach leaves these traders seeking out massive and unrealistic payouts. As such, they become easily swayed when they hear anyone who can provide numbers that meet their unrealistic return goals. In the end, they find that the person they believed was all about helping them win was just plotting against them. You can avoid these issues by educating yourself against the most common threats faced by traders today.
Social Media Scammers
On the top of the list is social media scammers. There are endless profiles of so-called experts claiming that will help you to turn $500 into $5000 in no time. Of course, they need you to send them the funding up front and you know how the rest of the story goes. They never pay you back.
The statistics don’t lie and more than half of all crypto scams reported originated on social media. Specifically, victims reported that they were lured into projects after seeing a convincing ad, post, or message on social media. These effects can be multiplied when the marketing takes place across all major social media platforms including Instagram, Facebook, WhatsApp, and Telegram.
There are a lot of different types of social media scams that you need to avoid. The general rule of thumb is to be discerning. Don’t believe anything that sounds too good to be true. You shouldn’t be happy when someone tells you that you’re going to get 1000% returns because it’s a scam. A more realistic response would be a 10% ROI.
Trading Group Scams
One major type of social media scam that s been gaining speed in 2023 is trading group scams. There are a lot of good trading groups where people can meet up and discuss potential trades and coordinate market movements to gain effect. However, not all trading groups are equal.
More people are coming forward saying that they paid for trading groups and received nothing in return. Some stated the so-called professional was inexperienced and lacked any education or experience. Sadly, there are no refunds on the blockchain and these scammers always make you pay in crypto up front.
You can avoid trading group scams by looking for red flags, One red flag would be if a project states that you will get rich quickly or that there is no risk. These statements mean you need to pack up and exit the area immediately to avoid losses. Remember it doesn’t matter if they promise you the world if you get nothing in the end.
Donation Scams
Another social media scam that has gotten hackers millions over the last few years is identity theft donation scams. In this scenario, a prominent influencer’s social media account would be hacked. Once in the hacker’s control, they would put out a request or their followers to donate to a cause using cryptocurrencies.
In the most publicized instance of this style of the hack, a group of hackers took over dozens of high-profile Twitter accounts they then posted the same charitable donations request to all of the millions of followers. They were eventually caught but not before securing millions in fraudulent donations.
Whale Manipulation
Whale manipulation is a problem in all markets but in the crypto market, it’s a little bit worse due to its unregulated nature. Whales are traders that hold massive reserves of a project. They hold enough tokens that they can influence the price of the asset by applying buying or selling pressure.
Whales can conduct manipulation in the form of pumps and dumps. This attack is when they start buying up an asset to make it looks as if it’s about to go parabolic. Then, they will suddenly sell off all their tokens to those entering to catch the hype. Suddenly, the value of the token will drop and the new traders are stuck holding the losses.
Developers have come up with some creative ways to combat whale manipulation. The META 1 Coin prevents whales from holding its token from the start. The system requires all traders to prove they are human and not acting on behalf of trading firms, government organizations, or corporations.
In addition to these protections, the developers included a $5M token limit. This token limit was set to prevent a single trader from holding enough META 1 Coins to create value fluctuations in the ecosystem. This system works together with the asset protection mechanisms.
META 1 Coin traders have to meet the minimum asset value to conduct a trade. The system uses offchain sensors called oracles to accomplish this task efficiently and in a streamlined manner. The advantage to this approach is that whales can’t dump the token as the lowest it will go is to its asset value.
Meta 1 Coin was put to the test recently during the last market correction. The safehaven asset passed with flying colors after securing 1.35% gains while the majority of the market lost 60%. The gains are the first time a safehaven token proved its merits in a trial by fire. It proved that cryptocurrencies could be stable and operate as the ideal store of value assets.
Upgrade Scam
The use of upgrade scams has been on the rise as well in the market. This style of attack is simple but very effective. A hacker will send you an update request from one of your crypto services. It can be for a wallet or exchange. The thing about the request is that it’s fake and it creates a backdoor for them to steal your crypto.
Upgrade scams can be hard to spot as normal crypto updates are a part of any good trader’s security protocol. They can have the same logos and terminology. The main thing to notice is the actual address of the email. Additionally, you should always double-check on the platform that there is an upgrade in the first place.
Phishing Attacks
Phishing attacks are the most popular way that people lose their crypto in 2023. This style of attack occurs when a hacker begins sending you probing contacts. They may use email, texts, or calls. They are slowly gathering information to leverage with their other data such as your social media.
The end goal is to impersonate you and take control of your accounts. They can accomplish this task because they are methodical in their approach. They may take months to slowly build information. In the end, they will get your full name, phone, banking, and account details which are enough to convince most firms.
One of the best ways to avoid fishing scams is to introduce 2-factor authorization on all accounts. This security protocol introduces a time-sensitive code that is required to approve transactions. It’s highly effective when you have it going to another device other than the one that may get attacked. To bypass the protections, the hacker would need access to both devices at the same time.
The absolute best way to avoid phishing attacks and identity theft, in general, is to avoid giving out your personal information. There are plenty of crypto options like DEXs that don’t require you to provide personal information to participate. These networks never have identity theft issues because they don’t hold any personal info in the first place.
Romance Scams
Romance scams are perhaps one of the saddest ways to try and steal someone’s crypto. In these scams, a person will use a dating app or social media to reach out to someone. They will pretend like they are doing amazing and are very interested in the person. Over time, they will cultivate a relationship.
The victims will think that they have found a successful partner that truly believes in their goodwill. However, the truth is much different as they are getting targeted for their crypto. In many instances, the attacker will first spend funding from their last victim extravagantly to make it seem as if they are very wealthy and have no interest in your holdings.
Then, out of the blue, they will lose access to their funding for some random reason. Now, the timing of this loss of funding will coincide with an amazing business venture. They will ask you to participate in the venture. As you have only known the person to be successful and informed, you are likely to join in. That’s when they leave with your crypto and your heart.
Rug Pulls
Rug pull is a term that refers to when developers are the ones that steal from their users. There have been many scam platforms that promised the world before draining the liquidity from the project and disappearing. These thieves are experts in their approach. They will have everything to support the farce.
These projects seem legit and can often list famous and well-recognized developers among the founding team. However, when you go to reach out to these developers, they are perplexed as they have never heard of the scam project. Sadly, their image was used to help sell the lie.
There have been many rugs pulls in the crypto market which has led to some unique ways to prevent these issues. One way that developers build confidence and users’ protection is through the use of token lockup periods. A token lockup is a smart contract that holds the initial funds raised by the firm for a present time. In many instances, it’s two years.
Hardware Wallet Scams
Hardware wallet scams are another issue that you need to look to avoid. There are a lot of horror stories of people placing their entire crypto savings into one of these trap devices only to find out it was a scam. In one style of scam, a person will sell a supposedly new hardware wallet on an auction site like eBay. Note, you should never buy a used hardware wallet under any circumstances.
Once you get the wallet, you’ll notice that it’s sealed with everything looking new. You set up and scratch off your passphrase. Then you load your cryptocurrency and everything seems good. What you are unaware of is that the hacker already had made a copy of the passphrase. They are now waiting for you to load your crypto so they can remove it without warning.
SIM Swap
Another way that people get their crypto wiped out in 2023 is via SIM swaps. If you use a mobile wallet, you need to be aware of this hack. It works by phishing your information. Then the hacker will get your phone provider. They will use the info they discovered to act as if they lost their phone and need to set up a new SIM.
This SIM gives them access to your mobile device. They can reinstall your crypto apps on their phone and access your wallets with ease. SIM hacks can be devastating and are very difficult to prevent. The best option is to use 2FA protections and discretion to not become a target of hackers in the first place.’
Hacking isn’t going Anywhere
The sad truth is that computer-based crimes like hacking are just getting started. As the world continues to go more digital there is going to always be some seeking to make their living in a negative manner. Use these tips to stay protected and avoid those that want to harm you.