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How to protect yourself from crypto scams

The crypto and blockchain sector is a fascinating, innovative field. However, as with any emerging industry, there are also black sheep who try to profit from the inexperience of investors. This article highlights different types of crypto scams, how you can identify them, what measures you should take if you are affected and how you can protect yourself in advance.


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Types of crypto fraud

Fraudsters are resourceful and use a variety of methods to enrich themselves illegally. It is therefore important that you are aware of the types and forms these scams can take. Here are some examples. The list is not exhaustive. Scammers are always coming up with new methods to carry out their illegal activities.

 

Phishing

The aim of phishing is to obtain valuable information such as passwords, private keys and personal data. This is done by scammers posing as a trustworthy source, such as a crypto exchange, a wallet platform or even a seemingly legitimate message from a friend.


The phishers' methods are often extremely sophisticated. They use fake websites that look deceptively real and are deceptively similar to the original. Fake emails that appear to come from official sources are also common tools. These emails may contain links to fake websites or malicious attachments that install malware on the computer when opened.


To protect yourself from phishing, caution is advised. You should never disclose sensitive information unless you are 100% sure that you are communicating with the legitimate source.

Always check the URL of the website or the sender of the email and make sure it is secure and authentic.

 

Ponzi and pyramid schemes

Ponzi schemes often promise unusually high returns in the shortest possible time, capitalising on greed and the desire to get rich quick. They often use appealing marketing tactics and suggest that success is virtually guaranteed. This leads to many people getting caught in the trap. The fact is, however, they pay out returns to previous participants from the deposits of new investors.

The problems arise when the income from the new investments is no longer sufficient to cover the promised returns for the previous investors. The system collapses and a number of investors lose all their capital. The organiser of the Ponzi or pyramid scheme often disappears with a considerable profit.


Scepticism is advisable to protect yourself from such scams. High, guaranteed returns are often a warning sign. Avoid investments that seem too good to be true. Do thorough research before getting involved in a project or investment.


As a general rule, only invest in projects or programmes that have clear and transparent business models and are demonstrably profitable. Remain vigilant and stay informed about current developments to protect yourself from Ponzi and pyramid schemes. If something seems too good to be true, it may be just that.

 

Fake ICOs (Initial Coin Offerings)

Scammers pose as legitimate blockchain projects and try to convince investors that their project is genuine. Their aim is to collect investor funds, only to disappear without a trace without ever developing a real project.


The deception often begins with a well-crafted website and a convincing white paper describing the vision and potential of the project. Impressive technical details and high returns are promised to attract investors. Unfortunately, this is just empty promises.


Thorough research is essential to protect yourself from fake ICOs. Check the team behind the project and research whether the members are authentic and have a proven track record in the industry. Also look for clear and detailed roadmaps as well as technical specifications of the project.


If you are still unsure, ask the community for opinions and experiences. Forums, social media and specialised crypto communities can provide valuable insights.

It is advisable to only invest in ICOs that are recommended by trustworthy sources and experts. Avoid projects that seem vague or immature.

 

Malware and Ransomware

Malware is a collective term for malicious software designed to perform harmful actions on a computer or network. In terms of cryptocurrencies, this can mean that fraudsters try to steal the private key of a wallet in order to steal the assets it contains.


Ransomware, on the other hand, encrypts the files or access to a system and then demands a ransom to release the data. In some cases, ransomware can be specifically designed to encrypt crypto wallets, leaving the owner without access to their crypto assets unless they pay the ransom demanded.


To protect yourself from malware and ransomware, diligent security practices are crucial. Always keep your operating system and security software up to date. Do not open emails or attachments from unknown senders and be careful when downloading files from untrusted sources.

Regular backups of your data can be crucial if you ever fall victim to ransomware.

 

Deception in the social media

Scammers create fake profiles or pages posing as celebrities, crypto experts or official representatives of projects. They use images and information to feign authenticity and thus gain the trust of users.

They also often organise fake competitions or giveaways in which cryptocurrencies or valuable prizes are supposedly raffled off. Participation often requires leaving personal information or sending a small amount of crypto as a "fee".

 

Recognising crypto fraud

Here are some tips on what you can look out for to recognise a scam.

 

Checking the website URL

Is the website URL spelled correctly? Does the website have a secure SSL certificate? And is the URL "clean", i.e. does it not have any prefix or suffix characters that could theoretically refer to a third-party website?

e.g. https://www.company.ch seems to be correct

e.g. http://ldfu.company.ch appears to be a scam


Distrust of offers that are too good to be true

Offers that seem too good to be true are often just that. Be critical of extremely high, guaranteed returns.

Check the team members and the project

For ICOs, it is essential to research the team behind the project to ensure that they are authentic and competent. The project should also have clear goals and a detailed roadmap.

Use a secure wallet

Trusted wallets and hardware wallets are essential to keep your assets safe. Look for a provider that is regulated and can guarantee you the security you need, e.g. access to your private keys or handing over your recovery seeds.

 

Measures in the event of crypto fraud

What should you do if you do happen to get targeted?

 

Report the fraud

In the event of fraud, report the incident immediately to the relevant authorities and platforms: https://www.antiphishing.ch/de/

Block your account and change your passwords

Take immediate action by protecting your accounts. Change your passwords and block affected accounts if necessary. If you are unsure how to do this, contact your provider's support immediately.

 

Proactive prevention of crypto fraud

The best defence against crypto scams is education. Stay informed about the various scam methods and follow developments in the crypto world closely.


Also, enable two-factor authentication for your crypto wallets and accounts to add an extra layer of security.


Last but not least: Public Wi-Fi networks are often insecure. Don't transact over them. Better yet, never open your wallets or accounts on public Wi-Fi networks. For public networks, we recommend using a VPN solution such as Cyberghost.


This article is for informational / promotional purposes only.

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