Cryptocurrency is gaining traction in the media in 2021, and so are crypto scams. Scams involving cryptocurrency have reached an all-time peak in 2021. Cryptocurrency money laundering is not a modern phenomenon. By the end of April, crypto criminals had laundered $432 million, according to the CipherTrace survey. Defi accounted for about 56% of the total volume laundered.
This figure has surpassed the entire year of 2020, which saw a loss of US$1.9 billion, and the entire year of 2019, which saw a loss of US$4.5 billion in cryptocurrency and bitcoin scam losses.
Elon Musk impersonators embezzled $2 million, according to a latest related citation of a cryptocurrency scam.
The theft was part of a sham giveaway. Cons posing as celebrities promised to multiply cryptocurrency investments but instead pocketed the funds.
Another major case of a crypto scam involved a British woman who lost all of her savings worth £9000 on cryptocurrency investment.
Five Cryptocurrency Scams That Are Indecipherable
Before implementing security measures to prevent cryptocurrency scams, it is critical to understand the areas and aspects of cryptocurrency that are most commonly exploited by criminals and hackers. Analytics Insight compiled a list of five crypto scams for 2021.
Fake Initial Coin Offerings (ICOs) are still a problem that crypto investors are concerned about. In 2017, there was an outbreak of ICO scams, with the rate of fake ICOs reaching 80%. Fortunately, the number declined in the years that followed. Even today, fake ICOs are a source of concern for investors. Customers were defrauded of $6 million by Big Coin.
DeFi is an abbreviation for ‘decentralized finance,’ which refers to an attempt to modernize and transform traditional trading methods and models. Decentralized finance enables users to stake their cryptocurrencies to other users to maximize profits through interest payments.
While some reputable DeFi platforms guarantee maximum returns on lending money, others are outright scams. Such phony platforms entice investors to lend money by promising large profits, but then pocket the money the investors lend. Such scams are so deftly carried out that investors frequently fail to recoup their losses.
Scams Caused by Viruses and Malware
It can be tedious to come up with new ideas and innovative ways to get into an investor’s wallet. Hackers and criminals use old malware and viruses to gain access to crypto wallets to avoid the overabundance of new ways to carry out wallet breaches. Two-factor authentication can be a security shield for crypto-wallets for this purpose alone.
Pumps and Dumps of Altcoin
Altcoins are often referred to as one of the cheapest and most illiquid penny stocks with limited market capitalization. The crypto pump and dump is a feature of penny stocks, and Altcoins are joining the trend. Altcoins, on the other hand, are highly volatile and often fall into the hands of scammers and criminals.
Nonfungible Tokens Scams
Nonfungible Tokens, or NFT, are gaining popularity at the moment. NFT is at risk of being replicated. It contains specific hashtag codes, and whoever controls the hashtag codes has power. There have been reports that recovering from an NFT hack is challenging because deciphering hashtag codes is not a simple task.
FTC Warning To Crypto Investors
On May 17, the Federal Trade Commission (FTC) issued a report on cryptocurrency investment scams. A total of $80 million was lost as a result of the scams. According to the FTC, cryptocurrency and bitcoin scams mostly target investors between the ages of 20 and 40.