How to Identify Cryptocurrency Investment Scams
Author: James Greening
History of Cryptocurrencies
Bitcoin was officially created in 2009, but cryptocurrency was mainly used to purchase goods and services on the dark web until 2016. As its value began to rise, legitimate businesses started seeing an opportunity in the “21st-century currency”. This excitement led to a huge increase of bitcoin value from barely reaching USD 1,000 per BTC in January 2017 to USD 2,000 per BTC in May the same year. After this point, the cryptocurrency gained momentum until December 2017 when it reached an enormous margin of USD 19,000 per BTC. In 2020, the price of Bitcoin has fluctuated between the range of USD 6,000 to USD 12,000 per BTC.
This short introduction explains the volatility of cryptocurrencies and how the idea of making a “quick profit” by trading cryptocurrencies came about. Even three years later, we can see the great rise of cryptocurrencies with “Dogecoin” to “Ethereum”. Yet, cryptocurrencies have not gained mainstream acceptance as regulators are trying to control the market of future currencies.
Nonetheless, this is where scammers are making huge profits of those who are still trying to materialize on the dream of quick profits. New “cryptocurrency mining” websites are popping up so fast that there is a niche market just to sell website templates. You buy a website template for $10 or if you want to look more legitimate, a tiny investment of $80 can land you a website that looks more professional than local businesses’. Therefore, this article is intended to inform our readers about our experiences with investment scams.
We come across numerous online scams daily and as per our observations, cryptocurrency investment scams are growing at an alarming rate. Scammers have so many ways to introduce their service to the audience - personal messages on Instagram or WhatsApp, Telegram groups, email communications and blogs with fake stories about how they have earned $2,000 in just two weeks are just some of the methods commonly used.
The unfortunate reality is that people lose significant amounts of money to investment scams each day. Scammers are confidence artists who make a living by convincing people to invest in their dubious schemes. As a result, victims end up paying them huge sums that are much higher than what one would spend on websites selling fake or non-existing goods.
In investment scams, people are forced to keep paying to continue with their investment and incur various hidden “fees”, only to be denied their payouts. The fact that payments are made using cryptocurrency makes it nearly practically impossible to recover the money even if victims quickly realize that they have been scammed.
We have hundreds of testimonials similar to these:
I was introduced to Zilla of Options360.biz on Instagram with the option of credible investment to earn a profit. Unfortunately, I was denied my withdrawal after 30 days of $708 BTC value investment. I was instructed to pay a withdrawal fee of $300 which brought me to realise that it was all a scam. All attempts to withdraw failed till today. I lost it all.
High-interest rates and big winnings are promised but they just collect your money and don't payout anything. I was hooked in a Facebook group and there the scam started. Offering you interest rates of 30 percent per day and more was the reason why I invested 0.05 BTC which is the equivalent of 500 USD after two days there was displayed 1.51 BTC in my so-called trading account. My contact person told me please withdraw some money. Two days after sending the withdrawal request, I was informed that my account has grown too far and I need to top up your account to be able to withdraw the earned money lol. I had to send them 800 USD more to withdraw all my earnings. ;)
Fortunately, there are many ways of uncovering a scam and the scammers behind it before it is too late. It is sensible to be cautious before investing in a cryptocurrency scheme; don’t make any fast decisions!
How to Recognize an Investment Scam
Check ScamAdviser.com
ScamAdviser’s automated Trust Score gives an analysis of a website based on more than 40 different criteria. It gathers publicly available data in one place to help you make a well-informed decision when it comes to committing with your money online.
Think Logically
If an opportunity of making easy money looks too good to be true, the chances are high that it is not legit. Do not forget to think twice and double-check things. Even the best investors in the world rarely create more than 20% wealth in a year. Scammers promise profits such as 1% per day, which adds up to an annual profit of 365%. Generating this kind of profit is not realistic in almost any scenario.
Check the Small Print
Taking a look at the Terms & Conditions of the website can enlighten you in some cases. Some scammers do not even take the time to fill this part of the website. However, if it is filled, but seems to include inconsistencies, do not trust this website.
Check the “Contact Us” Page
Scammers usually do not incorporate valid contact information on their website, as this would lead to eventual prosecution from law enforcement. If no physical address or phone number is available, turn back immediately. If information is given, verify whether it is genuine using services such as TrueCaller and Google Search. Often, it turns out that these details are fake or have been copied from an unrelated website.
Social Media Profiles
Does the website link to valid social media pages? Maintaining a social media presence can be time-consuming. Even if the company has social media pages, they may not be updated daily or at least a few times a week. A big red flag is if the self-proclaimed investment company has a profile on a website such as Instagram, but none on LinkedIn. Legitimate financial services companies do not have profiles on entertainment-based platforms such as Instagram and Facebook, instead opting for the more professional platform is LinkedIn.
Testimonials & Reviews
Does the website display testimonials by clients who claim to be happy with their investment? Beware, as it is also common practice for scammers to write fake reviews on their own website, to increase credibility. They often use stock images or images of random people and text that has been copied from other websites. The text and images can both be easily verified using Google Search.
Reviews on third-party websites are often faked too. Check the positive reviews closely. In most cases, they are written by new accounts with no profile pictures, or by accounts made specifically for writing paid reviews. If an account has a pattern of writing 5* reviews on several websites of the same category, it might be a fake account.
To know more about fake reviews, read the article First and Third Party Review Systems.
Copycat Websites
What does the URL of this website look like? A quick search on Google or Bing might reveal that it is a copycat website of a well-known legitimate company.
Spelling & Grammar Errors
Is the website content professional? Scammers are usually from countries where English is not the first language. As a result, their website content tends to be egregiously bad. Any legitimate company will ensure that its website is free of any spelling and grammar errors. If the content looks poorly written, there is a good chance it might be a scam.
Financial License
Cryptocurrency is not yet regulated in most countries and is even illegal in some. Scammers often claim to be legitimate by showing a UK company registration certificate. This means next to nothing because anyone can register a company in the UK for £12 in 24 hours. Firms providing financial services must be registered with a financial regulator such as the SEC in the US or the FCA in the UK.
Any Other Doubt?
Don’t do it! A typical scheme used by scammers during investment scams is described below, by one of our users who unfortunately fell for it.
When you open an account with [website], they will be pushing you to invest more by claiming you will gain a bigger profit. After some time, the account will show a profit, but you can never withdraw it. The system will instead force you to reinvest the initial capital and generated profit. Once you place a withdrawal request, they will block you from the Telegram group immediately and your withdrawal will be updated in the website as successful, even though no money will be transferred to your wallet. Pure scam, run away!
We hope this article helps you, in case of any doubt or question, do not hesitate to write to us!
For more information on how to spot scams, read the articles listed below:
How to Get Your Money Back From a Scam
Follow our social media channels for news about the latest scams and tips to stay safe online. We also invite you to join the growing community of scam fighters on our Facebook Group.
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