Although cryptocurrencies, such as Bitcoin, may seem to be new. I have been writing in Scamicide.com about cryptocurrency scams for nine years. Cryptocurrencies are legitimate, but scammers are increasingly taking advantage of the public’s fascination with cryptocurrencies to take old forms of scams and update them with a cryptocurrency twist. The perception of many in the public that cryptocurrencies offer an easy path to riches coupled with many people violating the cardinal rule of investing by investing in schemes that they do not understand creates a perfect storm for cryptocurrency scams.
Recently Lloyds Bank, a British bank issued a report in which it found that cryptocurrency scams in the UK increased by 23% in 2023 over the comparable period last year and that the average amount of money lost by victims of these scams was more than any other type of scam in the UK. Cryptocurrency scams are a huge problem in the United States and everywhere else as well.
Similar to the United States, the Lloyd Bank report found that most cryptocurrency scams began as posts on social media with Facebook and Instagram being the social media where these scams primarily appeared. Phony advertisements and bogus celebrity endorsements are common elements of many of these social media based scams.
According to the report the two primary cryptocurrency scams are “The Illusion” and “The Takeover.” In “The Illusion” the victim is lured into investing in a phony cryptocurrency platform with the promise of huge returns when the truth is that once the victim invests in the non-existent cryptocurrency, his or her money is gone forever. In “The Takeover” the scammer posing as an investment advisor convinces the victim to set up a legitimate cryptocurrency account and then gives control of the account and the victim’s digital wallet to the scammer who then steals the money.
As I have mentioned many times previously, you should never invest in anything that you do not fully understand. You also should not invest in anything without investigating the people offering the investments. In addition, as always, if the investment sounds too good to be true, it usually is. Some of the things to be on the lookout for in regard to cryptocurrency scams are promises of high, guaranteed returns on your investment, false claims of being SEC compliant, allowing you to invest using your credit card and pump and dump scams. For more information about pump and dump scams related to cryptocurrencies, check out the Scam of the day for April 11, 2018.
Also, as a general rule, investing based on social media posts is an invitation to disaster.
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