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According to reports and current events, cryptocurrency scams are on the rise in 2021.
Cryptocurrency is progressively seizing the media attention in 2021 and so are crypto scams. Cryptocurrency scams have hit an all-time high in 2021. Money laundering in crypto is not a new phenomenon. According to the CipherTrace report, crypto criminals have laundered US$432 million by the end of April. About 56% of the laundered amount was related to DeFi.
Notably, this figure has exceeded the total loss of US$1.9 billion in 2020, as well as the record loss of US$4.5 billion in blockchain and bitcoin fraud losses in 2019.
A latest appropriate citation of cryptocurrency scam may be Elon Musk impersonators who committed $2 million embezzlement. The robbery was part of a sham giveaway. Cons posing as celebrities vowed to triple cryptocurrency deposits but instead pocketed the funds.
Another big case of a crypto scam involves a British woman who spent all of her savings worth £9 000 (approximately Rs 9,00,000) on cryptocurrency investing.
Other Five Indecipherable Cryptocurrency Scams
Before implementing security measures to combat cryptocurrency scams, it is important to consider the areas and facets of cryptocurrency that are more often used by criminals and hackers. Analytics Insight has compiled a list of five crypto scams for 2021.
DeFi Put Off the Stroke
DeFi is an abbreviation for ‘decentralised finance,’ which refers to an effort to modernise and change existing trading practises and models. Decentralized finance enables users to stake their cryptocurrencies to other users in order to maximise gains through interest payments.
While some reputable DeFi sites guarantee full returns on lending capital, others are outright scams. Such phoney sites entice borrowers to lend money by offering large profits, but then pocket the money the investors lend. Such scams are so deftly carried out that investors often struggle to recoup their losses.
Nonfungible Tokens Scams
Nonfungible Tokens, or NFT, are gaining attention at the moment. NFT is at risk of being replicated. It includes basic hashtag codes, and whoever controls the hashtag codes has influence. There have been reports that NFT hack recovery is difficult because deciphering hashtag codes is not a layperson’s task.
Pumps and Dumps of Altcoin
An altcoin is often regarded as one of the cheapest and most illiquid penny stocks with limited market capitalizations. The crypto pump and dump are features of penny stocks, and Altcoins are joining the trend. However, since altcoins are unreliable, they often fall into the hands of scammers and criminals.
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 pocket. To avoid the deluge of new ways to carry out wallet hacks, hackers and criminals revert to old-school malware and viruses to obtain entry to crypto wallets. For this purpose alone, two-factor authentication may serve as a safeguard for cryptocurrency wallets.
Fake Initial Coin Offering (ICO) is still a problem that concerns crypto investors. In 2017, there was an outbreak of ICO scams, with the rate of false ICOs reaching 80%. Fortunately, the figure fell in the years that followed. Also now, investors are concerned about fraudulent ICOs. Customers were defrauded of $6 million by Big Coin.
The Federal Trade Commission Warns about the Manifold Increment in Crypto Investment Scams
The Federation Trade Commission (FTC) on May 17 had published a report on crypto investment scams. The scams resulted in a $80 million loss. According to the FTC, investors between the ages of 20 and 40 are the most vulnerable to cryptocurrencies and bitcoin fraud.