Crypto Scams To Watch Out For


    If you’re like most people, you’ve contacted at least one Nigerian prince about a seven figure inheritance. All you had to do was send them your bank account information, social security number, and a few thousand dollars to receive your award.

    I mean what could go wrong?

    Obviously, this type of scam is easy to spot. You don’t know any Nigerian princes, and anyone who wanted to give you millions probably wouldn’t email your old Hotmail account.

    The thing is, scams like this really work sometimes, which is why hackers and thieves never seem to go away. In fact, the Federal Trade Commission (FTC) recently reported that it received 2.1 million consumer fraud reports in 2020.

    The most commonly reported type of scam has been “fraudulent scam,” in which a predator pretends to be someone it is not. According to the agency, consumers lost more than $ 3.3 billion to fraud in 2020, up from $ 1.8 billion in 2019.

    Cryptocurrency scams on the rise

    With cryptocurrencies growing in popularity and with crypto becoming much more difficult to track than traditional bank transfers, it is not surprising that cryptocurrency fraud is wreaking havoc across the country.

    According to Federal Trade Commission (FTC) figures from May 2021, nearly 7,000 consumers have reported crypto fraud losses since October 2020. Total losses from reported scams were $ 80 million from October 2020 to May 2021, and individuals who reported the scam lost an average of $ 1,900.

    If you think this can’t happen to you, think again. Crypto scammers are notoriously adept with their strategies and know exactly how to gain your trust. I recently interviewed someone on my podcast who was targeted by a crypto scammer and the way it went is so surprising that I could hardly believe what I was hearing.

    If you’d rather listen to the podcast, please check out the Good Financial Cents podcast on Spotify. Here is the result:

    Here is the episode on Wealth Hacker:

    Crypto Scams: A True Story

    The guy I interviewed for my podcast wanted to remain anonymous, so I have to tell you what happened from a third party perspective. Let’s call him “John” in this story.

    Long story short, John was getting into investing a bit, but then he met a girl through a dating app who was into crypto investing through a couple of different websites.

    The woman was living outside the country at the time, but planned to return to the United States. She and John talked endlessly on all sorts of topics and eventually convinced him that he had to invest with her through her favorite bitcoin trading platform, and another website called “Bitlont”.

    Now we know that Binance is a legitimate crypto website but John had never heard of Bitlont before. Either way, he started investing small amounts of money by transferring crypto from Coinbase to Binance and Bitlont.

    John was a bit skeptical at first, so he ran some “tests” to make sure he could invest, make a profit and eventually cash out his crypto. At this point everything was working as it should.

    While John wasn’t entirely sure how Bitlont worked, he said the website had a ton of useful features. It was easy, but not necessarily general, he said. And while no stock metrics have been tracked, you can see what other traders are doing in real time on the Bitlont website and app. Crazy enough, he even phoned Bitlont customer service a couple of times and said their service was impeccable.

    Over time, John got used to investing through Bitlont, making some money, and then transferring it through Binance and back to his bank account.

    At some point, however, the situation got serious. The girl he had spoken to started telling him about a membership package that Bitlont had. When you deposit $ 5,000 per month through membership, they guarantee a certain profit per day. The same was true if you could commit to investing $ 10,000 a month, and profits only grew from there.

    Meanwhile, John’s mistress said the two would meet and date as soon as she got to the States. Her text message became more romantic and she sent him lots of pictures of herself that looked absolutely real.

    At one point, John said he started using his credit card to invest more to get to the next tier of membership, and that’s when it all started to fall apart.

    Apparently the woman he spoke to started nagging him about investing more before the end of the month, on the assumption that they wouldn’t be able to make any profits for the next month. That made no sense. why could not they are making profits in the next month like they did the previous month?

    Finally he asked the woman if everything that was happening was real. Instead of reassuring him or proving she was who she said she was, she got upset instead.

    From there, John began researching the company and finding more red flags. Where Bitlont was listed as newly opened in one place in June 2021, it was stated elsewhere on the company’s website that they were celebrating 10 years of service. That made no sense.

    Tired of all the nonsense, John tried to cash out his Bitlont account. During the trial, they informed him that suspicious activity had occurred on his account and that he would have to pay an additional $ 1,500 to access his funds.

    From there, of course, we know what happened. All of John’s assets locked up in Bitlont were gone, and the website (and the woman) mysteriously disappeared right afterwards. John says he was somewhat lucky that some of his cash was still held by Binance. Had he discovered the fraud just weeks later, he would likely have lost a lot more.

    Other crypto scams to watch out for

    If you start reading about common crypto scams, you can easily see that the scam story from “John” is not uncommon. The FTC reports that crypto scammers usually try to fit into the scene and they tend to pose as crypto enthusiasts who gather online to talk about their investments.

    Additionally, the FTC says cyber romance and crypto can be a “flammable combination”.

    “Scammers have been known to use the art of long-distance love to gain a person’s trust only to embed them in a cryptocurrency investment scam,” writes the FTC. They also find that 20% of people who have lost money to financial fraud have sent crypto assets online, and have done so through the veil of romance.

    “Many of them thought they were making an investment recommended by their supposed treasure,” they write.

    Also, be aware that you could be betrayed by someone you know or an industry professional you can trust. According to a story in Inverse, a 24-year-old crypto hedge fund manager named Stefan Quin pleaded guilty earlier this year after confessing that he had lied to investors about his returns for years. He faces 20 years in jail after providing false data to get his investors to put more of their money into his $ 90 million fund.

    At the end of the day, there are numerous other scams that you should be aware of and do your best to avoid them. Some of the most common crypto scam scams are:

    • Crypto companies fraudulently using a celebrity name: In some cases, crypto thieves try to use a celebrity’s name to add credibility to their business. The FTC says that as a result of this scam, people reportedly sent more than $ 2 million in cryptocurrency to Elon Musk impersonators during the six month period they profiled.
    • Crypto vacancy scams: Some crypto scammers are also trying to recruit individuals to sell crypto to others and possibly even get paid in crypto. However, it is all a ploy to get your hands on your banking and personal information. According to Inverse, this scam is usually set up like a pyramid scheme, with investors at the top taking all the profits and cheating on those below.
    • Blackmail emails: In other cases, scammers send threatening emails requesting crypto payments in exchange for not disclosing sensitive information or photos of the target.
    • Crypto scams on social media: The FTC also notes that if you read a tweet, text message, email, or received a message on social media asking you to send cryptocurrencies, it is definitely a scam. This applies even if the message was from a celebrity or someone you know.
    • Giveaway Scams: The story in Inverse also describes some kind of giveaway scam, which is usually about “doubling” or “tripling” the amount of crypto someone has in their account. In cases where the scam works and the victims send crypto to the scammer’s wallet, those assets simply “disappear”.
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    The bottom line

    If something seems too good to be true, it probably is. Our friend John probably realized this far too late, but it is a lesson we can all learn and apply in our everyday lives.

    Crypto scams are already widespread but are likely to only increase from here. If you want to move forward with an investment in crypto, you need to stay away from scammers who promise the world but leave you in your pocket.


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