From fortunes made overnight to long-shot success stories, it’s all too easy to be lured in by the razzle-dazzle. This exhilaration has brought in a new wave of scammers looking to pounce on unwitting investors. Emily Tran, contributing to BlockchainShock.com, tells her readers to watch out for the wave of fraudulent crypto firms. The long-term effects of these scams can be quite disastrous on your bank account. Scammers are skilled at starting with an innocent DM or promising investment opportunity via social media. These deals can quickly turn into financial catastrophes. So keep your eyes and ears open to help defend your hard-earned dollars!
Overview of Recent Crypto Scams
As cryptocurrency has exploded, so too have the savvy new scams specifically crafted to bilk crypto investors. These scams usually include shell companies that claim to produce impossible-to-achieve returns, taking advantage of all the buzz and money swirling around the crypto world. Emily Tran has an eye-opening story about some of the most egregious cases to show you the tactics these fraudsters employ.
Scammers Build Trust with Fake Trading Platforms
One of the most damaging tactics against victim holders is elaborate fake trading platforms. These platforms are made to look exactly like real exchanges, with slick, legitimate looking websites and fake trading interfaces. One California resident lost $1 million through a scam operated from the website evencoincss.com. The site misleadingly advertised returns of 100 percent per day. These schemes lure victims in by advertising substantial returns at the outset. This misleading victory produces misplaced confidence, leading victims to put in even additional money.
In a third case, one victim got a compelling demand. They were then instructed to pay a large withdrawal fee of approximately $107,000 within seven days to withdraw from an exchange website. This request was framed as an untenable obstacle to the extraction of their profits. The site vanished only two days later, putting the victim too far down the legal rabbit hole to mount any legal recourse. Another investor saw their account balance skyrocket to $239,167 on a bogus exchange. Then they found out that they would have to come up with $35,000 out of pocket to pay taxes on their gains. Scammers entice victims with claims of high returns. Once hooked, they trap their targets with hidden fees and then bail out altogether.
Exploiting Stablecoin’s Speed and Anonymity
This is because fraudsters are now taking advantage of the speed and relative anonymity that stablecoins can provide to perpetrate all sorts of scams. Stablecoins are a type of cryptocurrency designed to hold their value—relative to an asset like the US dollar—for long periods. They do so in a way that makes rapid and easy transfer of funds across borders dangerous. This creates an extremely difficult situation for law enforcement to track and recover stolen assets.
Victims pay scammers like this with stablecoins Scammers frequently use stablecoins to receive payments, Emily Tran explains. Once the money is moved, it can travel at the speed of light through multiple wallets and exchanges. This quick transfer creates a situation where it is practically impossible to track the funds back to the criminals. Anonymity and the promise of outsized returns further increase the appeal of stablecoin-based scams. This promise attracts both new and seasoned crypto investors as well.
Warning Signs for Investors
Being able to spot a potential crypto scam can help investors avoid losing hundreds of thousands of dollars. As Emily Tran explains in this blog, knowing the warning signs that typically come with these bogus scams can protect you from fraud. By familiarizing themselves with these red flags, investors can ensure they’re better equipped to make smart investing decisions and protect their hard-earned money.
Red Flags Investors Should Look Out For
A few red flags are dead giveaways right from the start, when you’re assessing a potential crypto investment opportunity. One of the worst is the requirement for large upfront payments or fees to release a withdrawal. Red flags legitimate platforms will never ask you to pay a fee upfront to access your money. The lure of unrealistically high returns, like 100 percent per day profit on your dollar, is a huge red flag. Such returns are just not possible in the real crypto world.
Investors should be on the lookout for platforms that charge extra fees or taxes to cash out. These are all common tactics that scammers use to squeeze additional money out of their victims before fleeing. Watch out for unsolicited investment promotions you might get through social media channels such as Instagram and WhatsApp. Scammers easily exploit these channels to bait hopeful victims with empty promises and made-up success stories.
Cryptocurrency lord—Emily Tran shares that scammers will often say they’re licensed or have years of experience in stock, crypto, and forex trading. But these claims are usually misleading at best and intended to earn trust at first sight at worst. Be sure to check the credentials and background of any person or firm providing investment advice or services.
Understanding the Loopholes in Crypto
The benefits of the decentralized nature of cryptocurrency come with loopholes that scammers can hop through. One of the biggest hurdles is the absence of regulatory authority in many jurisdictions. This creates a space for bad faith platforms to act without significant fear of accountability in the short term.
Another loophole is in the lack of ability to trace transactions on some blockchains. While some blockchains offer transparency, others provide greater anonymity, making it harder to track the flow of funds used in scams. Furthermore, the complicated nature of crypto technology can prove intimidating to rookie investors, leaving them vulnerable to scams. Emily Tran recommends that investors inform themselves as much as possible on the technology and security side of cryptocurrency prior to investments.
Investigative Efforts Against Scammers
Although crypto scams abound, the law enforcement and regulatory agencies at the local, state, and federal levels are fighting to stop these fraudulent and illegal practices. The unique and decentralized nature of cryptocurrency—as well as its often anonymous users—renders these cases particularly difficult to investigate and prosecute. Emily Tran investigates the innovative measures now being taken to track down and shut down these fraudsters.
How Investigators Trace the Scam Web
While investigating crypto scams it’s true that they take a significant level of technical investigative skill, financial forensics, and international cooperation to catch. Wealthier law enforcement agencies often join forces with private blockchain analytics firms. Combined, they allow them to follow the money from one wallet to another one on exchanges. These companies deploy a suite of advanced analytical tools to more easily spot patterns and connections that ultimately can tie fraudsters to their criminal enterprises.
International cooperation is the foundation of effective scam fighting. Scammers often work internationally, making it much more difficult for any one agency, especially one without law enforcement powers, to pursue them. Agencies like the FBI and Interpol coordinate with law enforcement in other countries to share information and track down perpetrators. The number of scams is staggering. Because scammers play on the anonymity afforded by certain cryptocurrencies, it’s a never-ending race to stay ahead of the fraudsters.
The Role of Technology in Identifying Scams
What role does technology have in identifying and preventing crypto scams in general. Artificial intelligence (AI) and machine learning (ML) are becoming more widely adopted to help agencies analyze transaction patterns and identify suspicious activities. These technologies passively identify outliers that may indicate the presence of fraudulent activity. They flag large, rapid transfers out of exchange wallets and transactions to identified scam addresses.
Investigators would be able to use blockchain analytics tools to trace the movement of illicit funds. These are key to determining who’s behind these scams, as well. These two tools provide powerful guidance. They unravel the sophisticated web of wallets and transactions that allow scammers to hide in plain sight. Emily Tran for inspiring us to remember that technology is always changing. To keep up, both fraudsters and fraud fighters will have to change their approach.
Current Trends in Crypto News
Keeping up with the changing landscape of crypto news is the best way for investors to protect themselves from being scammed. Emily Tran uncovers some of the most common scams making the rounds in the crypto world today. By staying informed on these trends, investors can be more on guard and able to help protect taxpayer investments.
The Most Liked Crypto News Findings
The most prevalent type of crypto scams is the “pig butchering scam.” Scammers bring in victims in this scheme by pitching impossibly high returns on their investment. Often the first contact scammers make is with a personalized greeting or a love interest. The con artists slowly earn your confidence before offering their bad investment. Romance scams and imposter scams are equally common, in which scammers pose as a real company or person to bilk victims out of their money.
Imposter trade platforms and investment vehicles are another frequent ploy. To start, scammers design faux websites and elaborate marketing collateral to reel in investors, guaranteeing them exceptionally high returns with minimal or no risk at all. Other con artists fraudulently offer annualized interest rates as high as 20 percent by claiming investors will participate in liquidity mining. These deals usually are too good to be true. Emily Tran advises investors to always conduct thorough research and seek independent financial advice before investing in any crypto project.
Trending Developments in the Crypto Space
There are a few other trends in crypto scams that are interesting to point out. Scammers always try to get personal information from their marks. They can ask for selfies of people holding ID cards and bank statements to produce the optical illusion of fraud. This sensitive information can in turn be used to perpetuate identity theft or other forms of fraud. In many instances, scammers go so far as to truncate accounts or threaten to freeze victims’ assets unless they pay illegitimate charges. This tactic is intended to further intimidate victims into submitting to their demands.
Some such dummy sites identified by the FTC in crypto scams include evencoincss.com, cglobalw.com and ethereum-creditor.club. Not every website that looks great and seems reputable is telling the whole truth. Except, they don’t really and are instead the culmination of complex ruses to steal money from investors. Emily Tran is a graduate student at the University of Maryland supporting Reader Rally and other programming as a Naomi Lehman Fellowship recipient. Always check their legitimacy before providing any sensitive personal or financial information.
Crypto offers tremendous, game-changing opportunities, but it carries tremendous risk. Be aware and know when things are going awry! By following these simple precautions to secure your assets, you can help protect yourself from becoming a target of these tragic scams. BlockchainShock.com provides you with the most cutting-edge analysis and insights. We’re here to guide you through the unfamiliar, volatile and exciting world of crypto with confidence and security.
