Bitcoin’s value is growing by the day, and so are Bitcoin scams. Over the past years, this Cryptocurrency has taken investors for a joyride. Sometimes the prices go up and later drop drastically. After the Corona epidemic, the cost of Bitcoin shot to a new level. The epidemic paved the way for more people to adjust to the Crypto world. It’s now clear that a digital currency is one way of improving trade and commerce. Bitcoin scam artists have also taken notice of these events.
With the rise in Blockchain and Crypto markets, Bitcoin Scams have also been on the rise. More and more victims are falling for these scams. Most of the scam artists claim to offer insane returns or merely false wallets.
An intelligent investor or one who knows more about Crypto will avoid these traps. What about the person who is new to Bitcoin? These are the targets of scam artists as they will easily fall for these traps.
The trick is to detect the scam artists even before any transaction takes place. As Crypto is an online derivative, investors should be extra careful with those they interact with. Avoid giving your personal details to unknown persons.
You should also read reviews and know which crypto investment options have been flagged as scams. With a bit of knowledge, you can now decide which Crypto investment to start with.
Bitcoin Scams to Avoid
One way Bitcoin Scams profit is by pretending to be an affiliate to a Crypto Exchange. Most of these scam artists will claim to have an affiliate to a legit bitcoin exchange company. One of the known scams is the South Korean platform BitKRX.
It was a fake exchange that took the real name of a legit bitcoin brokerage firm. The real bitcoin exchange firm is known as Korean Exchange (KRX.)
BitKRX used to scam investors by claiming to be an affiliate of the actual Bitcoin exchange company. Since most users associated the name with the legit platform, they didn’t bother to check. The scam was exposed in 2017 after numerous complaints started trickling in.
It was at this time that the actual Bitcoin exchange issued an urgent warning. Most of the scam victims have not recovered their lost investment.
Bitcoin Gold Scam
The naïve eye will quickly want to try anything with Gold. Bitcoin scam artists know this, and they created their own Bitcoin Gold scam. Unsuspecting Bitcoin investors were led to a trap by mybtgwallet.com. In 2017, BTG wallet duped investors over $3.2 million.
According to CNN, the scam artists claimed to offer a claim in their Bitcoin Gold Company. Below is the screenshot of what the scammers used to steal from investors.
These scam artists got $107,000 worth of Bitcoin gold and $72,000 value of Litecoin. There was also a scam involving Ethereum, and these scam artists got away with the $30,000 price of Ethereum. The last stash was worth $3 million in Bitcoin. These scam artists dare to post their views on the matter.
The platform claims that Private Key management is solely the responsibility of owners.
Fake Bitcoin scams
A classic scam involves fake Bitcoin as a currency. My Big Coin is one of the many known bitcoin scams. The site was selling fake Bitcoin to anyone who wanted to. According to the Commodities Futures Trading Commission, the platform stole $6 million from users.
The regulator filed a lawsuit on behalf of victims in late January 2019.
These scam artists would transfer the funds from victims to personal bank accounts. The scam artists would also use the funds to buy assets and other luxurious goods. That’s why you should not believe anyone who posts trips on a jet and urges you to invest in Bitcoin.
There were claims that the coin was actively traded on known platforms. My Big Coin even misled investors by claiming to be in partnership with MasterCard.
Some of the sued people include Mark Gillespie, My Big Coin Pay Inc, and Randall Carter.
Initial Coin Offering is another avenue Bitcoin scam artists take to steal from unsuspecting investors. Blockchain-backed companies and fake ICOs have become popular. With Bitcoin failing to have any regulation, it has opened the door for scam artists.
Most ICO frauds have one thing in common; investing in fake crypto companies. Centra Tech is one company that even garnered the support of DJ Khaled.
In 2017, the famous DJ and hits producer wrote on his Twitter, “I just received my Platinum Centra Debit Card.” He claimed that the Centra Card and Centra Wallet app is the ultimate winner. Other celebrities were warned against promoting fake ICOs, such as Floyd Mayweather Jr. and Paris Hilton.
SEC also fined Bitcoin Savings and Trust $40.7 million in 2014. The fine was a result of the company creating fake investments and Ponzi schemes.
These scam artists’ scammed investors into giving them 720,000 bitcoin promising a guaranteed 7 percent interest per week. Thanks to the SEC, most of these investors got part of their funds back.
The Ponzi Bitcoin Scam is ideally the worst scam to fall for. Several organizations have seen their share of this fraud. South Korean MiningMax is one such organization that was scamming users. Users were to invest $3,200 for a daily ROI of $200.
You would also get a $200 commission for a referral commission. There were 14 arrests in Korea in December 2017. It seems the biggest threat to Bitcoin is the misuse of this incredible technology.
Pump and Dump Scams
The pump and dump scam is not strictly found in Bitcoin, and other markets too face this scourge. A pump and dump scam is dangerous in the online investment world. Investors will hype a particular Bitcoin, and the media will jump in and show the increased profit.
These scam artists will cash out and dump the stocks. Investors who thought that this was the next big deal eventually lose their investment.
How to Avoid Bitcoin Scams
There’s no book to learn from, and these scam artists conjure new ways of scamming investors every day. You have to understand the market and be on the lookout for these scams. Reading up on the latest Bitcoin red flags is one way to stay ahead.
Knowledge is power; the more prepared you are, the better your chances of spotting these scams.
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We wish everyone a safe Crypto investing and trading experience.