The digital assets industry remains comparatively unregulated, making it ripe for fraudsters. Investors can avoid falling victim to scams by taking some precautionary measures.
In the previous article of this two-part series, we discussed the different cryptocurrency scams that malicious actors use to exploit users. Some of the sophisticated methods include phishing scams, Ponzi schemes, social media scams, and fake wallets. This article looks at the best practices that users ought to deploy to protect themselves and their digital assets.
Use Reputable Platforms and Exchanges
There are thousands of cryptocurrency exchanges and trading platforms, but only a fraction of these are legally licensed to operate. If a cryptocurrency exchange promises interest on your crypto holdings, make sure you understand how the interest is funded. For example, find out if the platform is lending out your assets to borrowers or staking them while rewarding you with the gains.
Additionally, always ensure the trading platform you are using is authorized to operate in your area of jurisdiction.
Beware Celebrity Endorsements
That celebrity-endorsed cryptocurrency project is probably a scam. Celebrity endorsements are skeptical because we don’t know if that person was paid to promote it. Also, multiple reports have shined the light on fake endorsements being used to promote what turn out to be crypto scams.
The easiest way criminals lure unsuspecting victims and establish a perception of credibility is by putting up fake celebrity endorsements. Some use fake (even if verified) social media accounts to mimic famous figures, like Tesla’s Elon Musk. As per a report by FTC, victims have paid approximately $2 million to Elon Musk’s impersonators on social media platforms over the first six months of 2021.
Protect Your Wallet
A wallet with a private key is necessary for you to invest in cryptocurrencies. As the name sounds, a private key must remain confidential, and if a firm tends to request your private key to take part in an investment opportunity, it is undoubtedly a scam.
Additionally, enable additional security measures like 2-Factor Authentication (2FA) and multi-sig. This essentially means that you need more than one approval to access or spend your crypto funds.
2FA adds an extra layer of protection to your crypto exchange accounts or wallets. Even if a hacker somehow gains the password to your account, they will need to have physical access to your phone or your trusted device to breach your account.
Shun Cold Calls
Scammers tend to call out of nowhere and ask you to participate in a cryptocurrency investment opportunity. Therefore, you should avoid sharing your private details, private keys and transferring money to such callers.
Always remember that reputable platforms contact you through official means. So always think twice whenever someone calls you with an offer that sounds too good to be true.
Sound Too Good To Be True?
Cryptocurrency fraudsters often tend to promise their potential victims of massive returns on investment. Unfortunately, these deals tend to sound too good to be true. Any firm promising a get-rich-quick opportunity and high returns is most probably fake and a scam, and you should take caution. It would be best if you always kept a level head.
Do Not Rush; Take Your Time
Fraudsters will tend to press their potential victims to partake in an investment opportunity quickly. They even persuade their victims to invest instantly by offering discounts and bonuses. Therefore, you should always take your time and conduct your research before committing any money to a cryptocurrency project.
It is essential to understand the history of a coin, its founders, the developers, the characteristics of the cryptocurrency, and the reasons behind its development, the investors financing it, the founders’ vision, the technology it uses, its social media identity, and the value that you give to the project. Those are some of the crucial questions one should ask before committing funds to a crypto-related project.
Always Check for Typos and Errors on a Website
If a website or document is full of typing errors and grammatical mistakes, you are almost certainly dealing with a cryptocurrency scam. Always double-check the URL to make sure you visit the right domain to avoid falling victim to phishing scams. For example, keenly lookout for letters that have been swapped with numbers like “l” for a “1” or an “O” for a “0.”
Also, check out the interface of the website and its emblem. Look out for every possible red flag. If there are errors in a cryptocurrency’s promotional material, it doesn’t say much about their attention to detail. Those who ignore errors are likely to fall victim to the scam.
Be Skeptical of Social Media Adverts
Scammers mostly use social media platforms to propagate fake investment opportunities. Also, some might use the images of celebrities without their permission to strengthen their case and make their investment appear legit. Always avoid ads promising you to double or triple your funds if you send crypto. Check out their social media profiles like Telegram or Twitter, whether they are official.
Use Anti-phishing Software to Block Malware, Other Malicious Websites
Phishing attacks have massively increased over the last year due to the emergence of COVID-19, which forced many organizations into remote working. However, you can use a broad range of tools to safeguard your users and data from phishing attacks.
The first line of defense against malicious emails is by filtering your emails using a Secure Email Gateway. An effective Secure Email Gateway filters out 99.9% of all harmful and malicious emails away from your inbox. In addition, it will automatically remove any email that contains spoof links or attachments.
In Sum
The underlying blockchain infrastructure that underpins cryptocurrency is known to be solid and secure. However, criminals have always found new ways to launch their malicious attacks. Therefore, investors must always remain keen on the information presented to them.
Furthermore, you should always ensure you use official websites and sources to carry out any activity related to cryptocurrencies. And lastly, remember that cryptocurrency transactions are irreversible. Therefore, once a transaction has been made, those funds cannot be retrieved.
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Note: BTSE Blog contents are intended solely to provide varying insights and perspectives. Unless otherwise noted, they do not represent the views of BTSE and should in no way be treated as investment advice. Markets are volatile, and trading brings rewards and risks. Trade with caution.
