Cryptocurrencies; not a day goes by without a scam reported, with new or desperate users typically the target of most malicious groups.
There are two main ways a scammer can get hold of one’s cryptocurrencies. They will either trick the user into sending them their funds, or they will obtain private keys or mnemonic phrases.
Those who send their money to scammers are made to believe they will get more in return. People posing as Elon Musk or Vitalik Buterin offering free money can be found on every major Twitter thread about cryptocurrencies.
These fake profiles will showcase an active promotion that doubles the money if you send it to a specific address. Other scammers pretend to be successful traders and offer to help someone trade their digital assets for a high return.
However, once you have sent your cryptocurrencies to an address, you no longer own them and have no chance of getting them back.
Most users who have been in cryptocurrencies for over a month know these are scams and know to avoid them. Scammers have taken to more extreme lengths to get hold of users’ funds, with fake applications on Google and Apple Playstore.
A requirement to log in is to provide your private keys or seed phrases. Once you provide those to anyone, a scammer will have complete control over your wallet and immediately remove all funds.
Recently, a Coinbase user has suffered a massive loss from a swindle worth over $11m. This was a phishing scam that sent a fake notification to the user claiming their wallet had been locked.
Once the user had provided account details to the fake email, it was accessed by the scammer, who quickly turned off the notifications and raised the daily withdrawal limits. Within 10 minutes all of the user’s Bitcoin and XLM were withdrawn.
Critics believe cryptocurrency is very much still the ‘wild west’ and use this as a means to push regulation against digital assets.
Many users think that having funds on an exchange means protection against attacks, however, situations still occur. There are many ways to keep your cryptocurrencies safe and it requires a lot of learning, which some excited new users fail to adhere to.
Staying alert and never giving personal information or private keys out could be a start.