Cryptocurrency Trading Common Fraudulent Practices Revealed www.deekpay.com

The cryptocurrency market is chaotic and scams abound, so to help investors identify shady practices in cryptocurrency trading and avoid scams, here's a guide to common cryptocurrency scams.

What is a cryptocurrency scam?

In the world of blockchain, many investors with the dream of achieving wealth freedom want to make money by speculating on coins, but it is also precisely this expectation that has become a tool for scammers.

Cryptocurrency scams are like any other financial scam in that the scammers target your cryptocurrency assets. Scammers usually use various tactics to get victims to divulge their personal data to gain access to their accounts or to transfer cryptocurrencies from their own accounts to the offender's account.

Investors, especially newbies, need to take cryptocurrency scams seriously, as data released by the U.S. Federal Trade Commission (FTC) shows that U.S. consumers reported losses related to cryptocurrency scams totalling $82 million in the fourth quarter of 2020 and the first quarter of 2021, an increase of more than nine times year-on-year, according to a report by the Wall Street Journal.

5 Common Fraudulent Practices

Scammers commonly use the following tactics to manipulate and guide their victims to gain access to their assets.

1. Fake exchanges and pseudo-crypto wallets with fake websites

When we browse on social media, we often see websites that use the slogan "Buy Bitcoin at a low cost" to attract people, claiming that their Bitcoin price is 5% lower than the market price, and promising to save money by trading on their platform. However, this is just a common tactic used by fraudsters to deceive people by using fake websites, fake exchanges and fake crypto wallets.

These fraudulent websites usually lure people with false high returns on investment, ask users to pay high initial fees, then keep asking for more money and finally disappear with various means of cash. By the time you realise that you have withdrawn your funds, they are nowhere to be found because the fraudster has already escaped with the private key or password stolen from you. To avoid such tactics:

Stick to reputable and long established cryptocurrency exchanges and wallets.

Verify the legitimacy of the scammer's contact details or website at an official verification channel before using it.

2. C2C OTC fraud

C2C, or Customer to Customer, is a type of over-the-counter (OTC) trading. Many large exchanges provide users with channels to trade over-the-counter (OTC), offering users convenient access to deposit and withdrawal services. However, because of the loss of platform supervision outside the exchange, unscrupulous merchants can easily take advantage of the situation.

Unscrupulous merchants in OTC trading may offer users counterfeit genuine USDT, which are not able to circulate on exchanges, and users' accounts may also be blocked by exchanges if they are given faulty USDT.

To prevent fraud, strictly review the qualifications of the merchant and double-check on the platform. It is best to confirm face-to-face that the transaction has arrived, and pay with one hand and deliver with the other.

3. Phishing with fake exchange emails, social media accounts, etc.

Fraudulent organisations routinely impersonate the emails, phone numbers, customer service mailboxes and social media accounts of large exchanges, and use these contacts to send out a large number of false messages or make phone calls to investors on a daily basis.

Some fraud groups also create fake official websites or Facebook fan pages to trick inexperienced newcomers into trusting them and then use the opportunity to ask users to transfer cryptocurrencies in their accounts to a certain address; there are also emails disguised as official notifications from fraudsters asking you to update or confirm your account information, and then directing you to a seemingly legitimate but actually fake website that tries to get you to divulge your personal information or the password to your cryptocurrency wallet.

Never enter your wallet information in an email link.

Always visit the site directly, no matter how reliable the site or link seems.

4. Airdrop fraud

The so-called airdrop scam refers to a scam that uses airdrop rewards to entice investors to connect their cryptocurrency wallets to a related scam website.

Scammers usually post fake short campaigns on social media to attract investors who want to receive free tokens to phishing websites, and when investors connect their wallets to the website and sign a transaction agreement, the scammers take the cryptocurrency from their wallets.

Don't believe the "pie in the sky" lie so easily.

Confirm the credentials of the website before linking your wallet to it.

5. Investment fraud

The scammers claim to be experienced "investment managers" who claim to have made millions of dollars investing in cryptocurrencies and want to lead their victims to make money from their investments.

The scammer will ask the victim to pay an upfront fee, and then its provide personal information, saying it's for a transfer or deposit, but in reality it's to gain access to the cryptocurrency in your wallet.

Another type of scam involves scammers taking real photographs and using them in adverts or articles to state that the investment is legitimate in a way that looks more authentic.

Be wary of any investment that requires you to pay a fee up front, and seek confirmation of the identity of the "investment manager".

How to complain about fraudulent exchanges

When you have been a victim of a cryptocurrency scam, you need to take the following actions immediately to minimise your losses:

1. Locate the transaction ID

Investigators need to use transaction IDs to identify the funds you send to fraudsters, and having them ready in advance can speed up the process and reduce the number of problems that can arise.

What is a transaction ID?

On most blockchains, a transaction ID is a unique string of numbers and letters that records the transfer of cryptocurrency from one address to another, sometimes becoming a transaction hash.

Where can I find the transaction ID?

In the case of Bitcoin, for example, first finding the address to which Bitcoin was sent and then pasting it into the search bar of any open-source blockchain browser will show all transactions to and from that address. By finding the matching transaction information by looking for the corresponding time and amount, you can identify your transaction ID by locating the hash associated with the transaction. but not all exchanges and cryptocurrency wallets can find the transaction ID this way, and it can take a deeper dive to find the relevant information.

2. Provide case information in a clear and concise manner

Succinctly providing important information related to what happened can help investigators better track funds Liu Xiang, such as transaction IDs, private wallets or trading accounts, the address of the fraudster's wallet or account, proof of the fraudulent process and other details.

3. Prepare proof of ownership of the original funds

Ensure that you can log in to the account where the money was sent to the fraudster, law enforcement will need proof of ownership of the original source of funds.

4. Contact law enforcement to report the case

Cybercrimes such as encryption scams are handled differently in different jurisdictions, so it is important to contact the appropriate law enforcement or government agency in a timely manner. Regardless of the location of the scammer and the victim, it is recommended that the victim first report the incident to the local police (the department that manages cybercrime is preferable) and provide the investigators with the information described above.

Can I get my money back if I've been scammed?

This reporting process can be very time-consuming and labour-intensive, with no guarantee that lost funds can be recovered. There are a number of factors that contribute to unrecoverable funds, including the speed and cross-border-able nature of digital asset transactions, lack of effective blockchain analysis tools and cryptocurrency investigation tools, etc. But regardless of this, if you are willing to go ahead and start a trace and investigation, reporting the case to the authorities will definitely increase the chances of recovering your funds.

Of course, the best way to protect your money is still to trade cryptocurrencies on exchanges that are strictly regulated and guard against fraudsters!