Home Bitcoin NewsBitcoin Scam Top 5 Cryptocurrency Scams Targetting Australians – Forbes Advisor Australia – Forbes

Top 5 Cryptocurrency Scams Targetting Australians – Forbes Advisor Australia – Forbes

Top 5 Cryptocurrency Scams Targetting Australians – Forbes Advisor Australia – Forbes

Here are five common crypto scams to be aware of:

Crypto Investment Schemes:

The basic idea behind these scams is to convince investors to invest their money in the scheme, promising high returns in a short amount of time. They use various tactics to lure people into their schemes, such as social media marketing, celebrity endorsements, and promises of exclusive investment opportunities.

Once the investors send their money to the scammer, the funds are typically not invested as promised. Instead, the scammers often use the money to pay off earlier investors or keep it for themselves. This is known as a Ponzi scheme, where new investors are used to paying off earlier investors, creating a cycle that collapses when new investors are no longer available to keep the scheme going.

Phishing Scams:

Crypto phishing schemes aim to steal investors’ cryptocurrency by tricking them into giving away their login credentials or private keys to their digital wallets. These scams typically use email, social media, or other online communication channels to impersonate a legitimate company or service provider, such as a cryptocurrency exchange or wallet provider.

Typically, a phishing scam consists of similar steps. There is initial communication, which appears to be from a legitimate cryptocurrency exchange or wallet provider. The message will contain a link that takes the recipient to a fake website that looks identical to the real one. The message may ask the recipient to verify their account details or take other action, such as resetting their password or downloading a software update. Once entered, the scammers will use this sensitive information to steal their funds.

Fake ICOs:

Initial coin offerings (ICOs) are a common way for new cryptocurrencies to raise funds. Fake ICOs can take many forms, but they typically involve creating a website and marketing materials that look professional and legitimate, with promises of high returns, low risks, and innovative technology. They may use fake endorsements, false testimonials, and other tactics to build credibility and convince people to invest.

Once investors send money to the fake ICO, the organisers may use various techniques to steal the funds. They may simply take the money and disappear, never delivering the promised cryptocurrency or token. Alternatively, they may use the funds to create a fake cryptocurrency or token that has no real value and cannot be sold or traded on an exchange.

“Before investing into any crypto or blockchain project users should always do your own research. By remaining sceptical you can identify a scam for what it is before potentially losing your funds or giving away personal information,” says Cheung.

“Things to look at includes who is behind the project such as investors and the leadership team; are they already an established company with a viable product or is it still conceptual; what is the vision and roadmap for the future; and what is the market telling you about supply, competition, trading volume and liquidity.”

Malicious Smart Contracts:

If you are holding crypto in a wallet and dabbling with decentralised finance platforms or NFTs, it is important to be aware of malicious smart contracts. Malicious smart contracts are programs designed to trick people into giving up their digital assets or personal information. These contracts are often created to look like legitimate ones, but instead of fulfilling their intended function, they have hidden code that is intended to exploit user wallets and steal funds.

One common way malicious smart contracts can scam people is through “phishing attacks.” In a phishing attack, the malicious contract will mimic a legitimate contract, such as a token sale or a decentralised exchange. Users will be prompted to connect their wallet and often have to complete an “approval” type transaction. While this is also the case with legitimate smart contracts, malicious contracts will use an ‘approve-all’ type function, essentially allowing all assets held in the wallet to be taken at once.

Honeypot Tokens:

Honeypot tokens are malicious tokens listed on decentralised exchanges with another legitimate token, such as ETH, for liquidity. The token’s creators will often create fake trading volumes and use various tactics to make it appear as if the token is in high demand. They may use bots to trade the token with themselves or offer incentives for people to buy and hold the token. This can create the illusion of demand and price appreciation, leading investors to believe they are making a smart investment.

However, after purchasing the token by trading some legitimate cryptocurrency, they will find the token cannot be sold. In other words, the unlucky trader has bought something worthless that can never be sold. This leaves the investors with worthless tokens, and the scammers walk away with the legitimate tokens that were traded in return. You can check if a token is a honeypot using a checker service such as DetectHoneyPot.

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