So what is bad about crypto these days? The answer is scams. Cryptocurrency has become wildly popular in recent years. While it offers exciting investment opportunities, it has also attracted a fair share of bad actors. These folks are always looking for new ways to exploit the unsuspecting. Understanding crypto scams begins with recognizing the sheer variety and creativity behind these fraudulent schemes.
Crypto scams come in many forms, but they all boil down to one thing: someone trying to trick you out of your money. The digital nature of cryptocurrencies makes it easier for scammers to hide their tracks, making these schemes particularly nasty and complex.
According to recent statistics, crypto scams are on the rise. In fact, millions of dollars are lost each year to these schemes, affecting everyone from seasoned investors to newbies. And the emotional toll is significant too. People often feel embarrassed or violated after falling victim to a scam, which can further complicate the recovery process.
Before diving into specific types of scams, it’s important to grasp just how significant this issue is. From phishing scams to Ponzi schemes, the landscape is riddled with traps, making education and vigilance critical. By staying informed, you can protect yourself and your loved ones from falling prey to these harmful activities.
Types of Crypto Scams
Phishing scams are among the most common types of crypto scams. Scammers use emails, social media messages, or fake websites to trick you into giving up your private keys or logging into fake exchange sites. Once they have your information, they drain your crypto wallet. It often starts with a seemingly innocent message or an urgent email that looks like it’s from a trusted source.
Ponzi schemes are another old trick adapted for the crypto world. These scams promise massive returns on your investment. Early investors do get some returns, funded by new investors’ money, making the scheme look legit. Eventually, the scammer takes off with most of the funds, leaving the majority of investors with nothing. Be wary of guarantees of high, risk-free returns.
Pump and dump schemes manipulate the price of a cryptocurrency to sell it at an inflated value. Scammers buy a large amount of a low-value cryptocurrency, then hype it up in online forums to pump up the price. Once it peaks, they sell off their holdings for a profit, causing the price to crash. The unsuspecting investors who bought in at the peak are left with worthless coins.
Fake Initial Coin Offerings (ICOs) are yet another scheme. Fraudsters create a seemingly legitimate project, complete with a whitepaper, website, and marketing campaign. They collect funds from investors during the ICO phase and then disappear, leaving investors with nothing. Researching a project’s team and its history is crucial before investing. I’ve unfortunately fallen for these before, thinking they are some new and great coin and suddenly the website disappears along with the promise of receiving those digital coins as the money spent on them is gone. Fortunately, I didn’t spend a lot on them so it’s not money that I necessairly miss.
Rug pulls are particularly devastating. In this scam, developers of a project suddenly withdraw all funds and vanish. This commonly happens in decentralized finance (DeFi) projects. Initially, everything looks above board, with the project showing signs of rapid development. Then, out of nowhere, the developers pull the plug, taking all the invested funds with them. Now it’s time to talk about a very dangerous crypto scam that appears to be getting worse.
Understanding the ‘Pig Butchering’ Crypto Scam
The ‘pig butchering’ crypto scam is particularly cruel and methodical. It starts with scammers establishing a relationship with the target, often on social media or dating apps. The scammers groom their victims over time, gaining their trust and fostering a sense of friendship or even romance. 
Once trust is established, the scammers introduce the idea of investing in a cryptocurrency opportunity, usually claiming huge returns. The victim is lured in with small, seemingly successful investments that reinforce the scammer’s claims. Gradually, the scammer encourages the victim to invest more and more money.
Eventually, once the scammer believes they’ve gotten as much out of the victim as possible, they disappear, taking all the invested funds with them. The name ‘pig butchering’ comes from the way scammers ‘fatten up’ their targets with fake returns before the final ‘slaughter’.
Real-life stories of this scam are heart-wrenching. People have lost life savings, retirement funds, and even borrowed money, all because they were manipulated into trusting the wrong person. The emotional damage can be just as severe as the financial loss, leaving victims feeling isolated and ashamed. To give you an idea just how bad this is, I will link to an article which you can read about by clicking here. It centers around a bank that failed or collapsed in my home state of Kansas last year. This is a recent article and when I read the REAL reason this bank collapsed, I was completely shocked and it goes to show you just how dangerous the pig butchering scam is.
Avoiding this scam requires a good dose of skepticism and caution, especially when it comes to online relationships and investment opportunities that seem too good to be true. Always verify the legitimacy of investment platforms and never rush into financial decisions based on the advice of someone you met online. They will usually send you a link that takes you to a site that appears to be legitimate, as in mimicing an actual crypto exchange or investment site. The problem is, if you sign up for an account on this fraudulent site, the scammer will make it seem that the money you put into it is causing massive returns in your investment, all the while the numbers are made up. As was said earlier, once the scammer believes they’ve gotten all the money they believe they can out of you, they will disappear and you will be unable to withdraw anything. ALWAYS stay vigiliant and do your research!
Sim-Swapping
This is another crypto scam that I was unfortunately a victim of a few years ago and this one was a little costly. You might be wondering what sim-swapping is and it has to do with your smart phone. Bad actors are able to find a way to switch your phone number from one carrier to another via your phone’s sim due to a lack of proctection from that specific carrier.
Once that happens, any accounts tied to your phone number will now be sent to the hacker and they will be able to access any accounts that your phone number is tied to because if you have 2-Factor Authentication, they will usually send you a code via text message to your phone number. The person who then took away your phone number will be able to get that code and then sadly, get access to your account or accounts. 
I’ll never forget the time it happened to me. I happened to be at work when I suddenly lost data access on my phone and I couldn’t understand why. About an hour later I lost voice access as well and thought that it was highly strange, but I kept thinking that maybe they were doing work to a nearby tower and that could be the reason why I don’t have any kind of service on my phone.
When I left work for the day, I still had no service and I became increasingly concerned. I went over to my friend’s house and asked to use his phone to call my service provider to find out what is going on. When I was able to get a represntative on the line and gave them my phone number and account information, the customer service representative then told me that my number had been ported over to another carrier. I then screamed “WHAT?! I GAVE NO SUCH AUTHORIZATION!” The representative then became quiet and I said that it had better be fixed now or get me a manager to get this fixed immediately.
After I was put on hold, the representative said they had talked to a manager and that they would have my number back to me by midnight. It was only a few hours away at that time and I thought things would be ok when I got my number back. I was completely wrong. Early the next morning when I was at my first job (I cleaned a Post Office early in the mornings at that time), I wanted to check my bank account because it was during the time of the Covid Pandemic and people were getting a third stimulus check around that time. When I logged into my mobile banking app and saw my balance, my jaw dropped because I didn’t see the stimulus. Instead, my account was extremely negative as there were two massive charges to a cryptocurrency exchange that I had an account with at the time.
Now for legal reasons, I cannot say the name of that particular crypto exchange and I’ll explain why here in a bit. Once my bank opened later that day, I had to call them immedaitely and get a stop payment and do a dispute as I did not authorize those charges. I had to pay a fee for it, but I didn’t care as I was mad at the amount of money I initially lost. I was able to get the money returned, but it definitely was not the end of things and it got a little worse.
When I tried to log into my account on that crypto exchange, I couldn’t because the person who now had access to my account, also changed the password and the email address associated with it, and I was truly locked out. Sadly, at the time, the crypto exchange only had an automated number and did not have live representatives so I had to email them. Their responses over the course of the next few months was infuriating. I had lost all the crypto associated with that account and they were blaming me for the unauthorized access to my account and transactions thereafter.
I was able to find a law group that was targeting this crypto exchange because others were having similar issues, and thanks to them, I was able to get some compensation from what had happened even though the exchange denied any wrong doing. In return for getting this compensation, I am not allowed to say the name of the crypto exchange that was involved, I won’t even hint to it either.
I will say this, go to your service provider of your smartphone and find out exactly how they will protect you from being of victim of sim-swapping like I was. The unfortunate thing for me is that the carrier I was with, was actually in the middle of a merger with another carrier and since they used two different types of networks and they had to shut down one of them, I believe it left me vulnerable to this particular method of hacking. I wanted to legally go after the carrier(s) for what happened, but I kind of had to pick my battles and it was easier to do so with the crypto exchange. I do have a new account with that crypto exchange, but I only hold a little crypto on there and will always do so as I don’t trust them after what happened, to fully protect me or compensate me if something like this were to happen again.
Vulnerability of the Elderly to Crypto Scams
Elderly individuals are particularly vulnerable to crypto scams for several reasons. Many are less familiar with digital technology and the intricate world of cryptocurrency, making them easy targets for savvy scammers. They are also more likely to trust strangers, especially those who pose as helpful friends or financial advisors.
Common tactics used against elderly victims include unsolicited phone calls, convincing emails, and fake online investment platforms. Scammers might also use scare tactics, like warning of impending financial losses, to push the elderly into quick decisions. The emotional manipulation is often intense, playing on fears and insecurities.
The psychological impact of these scams on elderly victims cannot be overstated. Many feel a profound sense of betrayal and embarrassment, which can lead to isolation and decreased mental health. It’s not just about losing money; it’s about the broken trust and the feeling of being taken advantage of.
Numerous case studies highlight how widespread and damaging these scams can be. One common story involves scammers pretending to be tech support, convincing the elderly to grant remote access to their computers. From there, they steal sensitive information and cryptocurrencies.
Raising awareness among the elderly and their families is crucial. Simple steps like educating them about basic online security, encouraging skepticism of unsolicited offers, and setting up protections on their financial accounts can go a long way in preventing these scams. Making sure they know who to consult when in doubt can also make a huge difference.
Preventing and Avoiding Crypto Scams
Staying vigilant is your first line of defense against crypto scams. Make it a habit to double-check sources and verify information before making any investment decisions. If something feels off or too good to be true, it probably is.
Recognizing red flags can save you from falling victim. Be cautious of unsolicited investment opportunities, especially those promising guaranteed returns. Always conduct thorough research on any investment platform or advisor before committing.
Securing your digital assets is crucial. Use strong, unique passwords, enable two-factor authentication (2FA) (will not work if a victim of sim-swapping!), and store your private keys offline in a secure location. Avoid sharing sensitive information, even with people you trust online. 
Education plays a vital role in preventing scams. Keep yourself and your loved ones informed about the latest scam tactics. Knowledge empowers you to identify and avoid potential threats.
If you suspect you’re being scammed, take immediate action. Stop all communication with the suspect, report the incident to relevant authorities, and seek advice from trusted sources. Quick action can often mitigate losses.
Regulatory bodies are stepping up to tackle crypto scams. Keep an eye on regulatory updates and ensure any platform or project you invest in complies with legal standards. Being aware of the law and regulatory landscape helps you make informed decisions.