Fraud & Security

Avoiding Cryptocurrency Scams: What You Need to Know

In today’s landscape, scams of every kind are rampant. You have probably heard about cryptocurrency scams through the media, but in order to truly protect yourself from this scam category, you need to know what it is and what to look for to avoid it.

What is Cryptocurrency?

First things first: what is cryptocurrency? The Oxford dictionary defines cryptocurrency as, “a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.” In simpler terms, cryptocurrency is a type of currency that uses digital files as money and is not regulated by a bank. Digital signatures are then used to keep transactions secure.

Cryptocurrency, such as Bitcoin, is untraceable – meaning that once it is gone, there is no way to get it back. Because of its untraceable nature, it is a favorite scamming tool for many criminals.  There are a variety of ways that criminals use cryptocurrency to scam unsuspecting individuals and to commit other crimes.

Common Cryptocurrency Scams

Like other types of scams, you are your first line of defense when it comes to avoiding cryptocurrency scams. Educate yourself about common types of scams to look out for so you don’t end up a victim.

Malicious Social Media Posts

One of the most recent types of cryptocurrency scams took place on Twitter. In July 2020, there was a major Twitter breach in which a number of verified Twitter accounts (the ones with the blue checkmarks) were used to send malicious Tweets. These posts encouraged readers to send cryptocurrency in exchange for more cryptocurrency (send $1,000 and receive $2,000). Accounts that were hacked included prominent celebrities such as Elon Musk, Joe Biden, and more.

TIP: If someone is offering you free money, it’s probably a scam.

Cloned Website

A goal of many website hacks is to gain the information needed to clone a website. Once a reputable, trusted site, like a known cryptocurrency startup, for example, is cloned, it is easy to convince unsuspecting potential investors to send money to the wrong place. In this example, instead of heading to the payment processing URL to complete your cryptocurrency investment, you will be redirected to another URL that looks like the same site, but perhaps has a small typo like “rn” instead of an “m”. Here, you will be tricked into sending money to the scammer.

TIP: When visiting a website, type the URL into the search bar exactly and carefully to avoid clicking on any malicious links.

Phishing

If you are unfamiliar with the concept of phishing, it is scamming through emails. In this type of cryptocurrency scam, the scammer sends an email to an individual threatening them or creating a sense of urgency in some way. These emails will demand cryptocurrency payment for one reason or another – usually something regarding blackmail, an unpaid bill, a hacked device, etc. With the recent COVID-19 pandemic, these scam emails could even threaten non-treatment of a family member or promise a COVID-19 test, cure, or vaccine.

TIP: Be mindful of the links you click in emails. If you do not know the sender or were not expecting the email, you should not trust it.

Also, as of July 2020, there are no COVID-19 cures or vaccines available to the public. No hospital is going to ask for a cryptocurrency payment for treatment.

Malicious Mobile Apps (MMA’s)

In this form of cryptocurrency scam, criminals add fake cryptocurrency apps to app stores such as the Apple App Store or the Google Play Store. You may also find these apps for download through links in phishing or SMS phishing (text scam) messages (the risk of downloading these is greater for Android users because of the way their operating system works). Once a fake cryptocurrency app is downloaded and you invest in cryptocurrency, your money will be lost.

TIP: Before downloading an app, look for any suspicious features or inconsistencies. Does the logo look fake or have coloring that doesn’t quite match the brand you were looking for? Are there typos in the app title or description? Are there reviews that make the app seem suspicious or malicious?

These are only a few of the cryptocurrency scams that exist to trick people out of their hard earned money in today’s landscape. Always be careful and stop, and think before you click on any links or send money to anyone. If you think you may have been scammed, call our contact center at 888-777-9982 and our team will help ensure the security of your Patriot accounts.