5 Top Crypto Scams To Watch In 2022 | Cryptocurrency
Cryptocurrency-related crime soared 79% and hit an all-time high in 2021, with malicious actors illegally stealing $14 billion in funds last year, according to Chainalysis.
Crypto scams easily accounted for the largest portion of this total, while stolen funds, mostly from cryptocurrency businesses, were the second biggest cause of loss.
With digital assets making up a growing part of the global financial ecosystem – cryptocurrency trading volume jumped 567% in 2021 to $15.8 trillion – it pays to keep abreast of the various nefarious ways which you may be duped, defrauded or victimized.
Here are some of the top crypto scams to watch out for in 2022:
- “Pig butcher” crypto scam.
- “Pump and dump” crypto scam.
- “Rug pull” crypto scam.
- Airdrop crypto scam.
- Crypto phishing scam.
“Pig Butchering” cryptocurrency scam
At least some of the major crypto scams have colorful names. For the victims of this cruel scam, however, the results are very serious.
This scam typically begins on online dating sites, where the scammer uses an attractive profile picture to lure the “pig”, then proceeds to “fatten” the proverbial pig over a period of time via online messaging, victim getting closer and closer. and more trust in the aggressor.
The scammer eventually informs the victim of the huge gains he has made in the cryptocurrency markets and gets his mark to follow in some investments, which initially pay off handsomely on paper. Of course, the money is lost as soon as it is sent, with the scammer using bogus sites to trick his victim into sending larger and larger sums of money to this bogus account.
Withdrawals prove impossible and the “pig”, now fattened up to slaughter, is left to the wind. This type of scam is believed to have originated in China and is notable for its relatively long duration.
“Pump and Dump” scam
“Pump and Dump” scams are not unique to cryptocurrency, but without the regulation enjoyed by stocks traded on major US exchanges, for example, the Wild West of finance suffers from a good degree of fraud, including the Pump-and-Dump scam. .
Such scams, which are also likely to occur in the penny stock market, are characterized by a small group of insiders who own a given asset – in this case, a digital currency. These under-traded assets are then enhanced through advertising, whether through social media, word of mouth, or other forms of promotion.
When the oblivious investing public rage buys the cryptocurrency, which is often newly issued with little trading history, insiders begin selling, or dumping, the shares at high prices, triggering a strong sell-off and benefiting investors. expense of the duped masses.
In a June 2021 case, some members of FaZe Clan, one of the most popular esports organizations in the world, were involved in promoting a new cryptocurrency called Save the Kids, with a portion of the proceeds pledged to charity. It only took a few days for the coin to plummet, and the FaZe members involved in the launch were all suspended or removed from the group, which distanced itself from their activity.
The fired team member tweeted that he had “no malicious intent” in promoting the cryptocurrency, but some investors accused the group of participating in a pump-and-dump.
“Trug Pull” scam
“One particular scam to avoid is the ‘rug pull’ scam,” says Vincent D’Agostino, cybercrime and incident response manager at BlueVoyant. Carpet pulls occur “when promoters of a cryptocurrency pump their new coin to drive prices up before disappearing with the funds. Investors end up with a worthless token,” D’Agostino explains. “This especially happens with coins with no fundamentals and no real future.”
One of the key differences between a pump and dump scam and a rug draw scam is that the latter often doesn’t even allow uninitiated owners to sell, with the token being coded in a way that only allows insiders to exit. . . There are several other ways for insiders to run these scams, which are specific to cryptocurrency.
The Squid scam attracted a lot of attention at the end of 2021, when a newly launched cryptocurrency known as Squid Game – named after the Netflix Inc. series (ticker: NFLX) suddenly became popular on a game in which all competitors are killed except one, who emerges with riches – lived up to its name and banned the sale.
SQUID, the coin’s ticker, started selling at one cent, then spiked above $90, before immediately plunging back to zero as the scammers ‘knocked down’ the masses.
Airdrop Crypto Scam
Another scam, prominent in the field of decentralized finance, or DeFi, is tied to something in crypto called an airdrop.
“More recently, popular and nefarious actors have taken over the popular trend of airdrop tokens, which is usually done to start and grow a grassroots community,” says Alan Eschweiler, chief revenue officer at Stacked, a platform simplified form of crypto investing.
The scam works like this: “An entity airdrops you a token that appears to have value, and when you go to exchange that airdrop for another more well-known token, you are giving a protocol more permissions than you think” , explains Eschweiler. This “allows the hacker to access all the assets in your wallet,” he says.
The easiest way to avoid this scam? “Never give an unknown user permission to access your decentralized wallets,” says Eschweiler, “without understanding what capabilities you are granting that person.”
One of the most common cryptocurrency scams is the phishing scam, which, like the classic pump-and-dump, is not specific to digital currency. “In simple terms, this means tricking victims into revealing sensitive details like passwords, keys, etc.,” says Marie Tatibouet, chief marketing officer at Gate.io, a digital cryptocurrency trading platform.
Keys refer to the “private keys” needed to open any secure crypto wallet. It is the equivalent of your password and is the only thing that gives you exclusive access to your funds. Phishing scams, which are also used in regular identity theft and various types of corporate fraud, often arrive via email, with scammers impersonating an authority and asking for credentials. These schemes are also multiplying on social networks.
“Please don’t click on any random links you see on Twitter,” Tatibouet says. Often, “attackers promise wealth and ‘returns’ in exchange” for sensitive information, warns Tatibouet.
“Check Twitter IDs or Discord ID,” says Tatibouet, referring to another popular communication platform. “Make sure you are sourcing links from real, verified accounts.”
“It takes a bit of time, but it’s definitely worth it,” says Tatibouet.