Protect yourself against cryptocurrency scams

Protect yourself against cryptocurrency scams
2019 was a very profitable year for hackers and scammers. It is said that during 2019, cybercriminals stole cryptocurrencies to the value of $4.26 billion from users, investors and exchanges. As we welcome the new year and set new year’s resolutions, protecting your crypto holdings against hackers and scammers should be on the top of the list. Today we take a look at popular scams and how to protect yourself against cryptocurrency scams.

Top crypto scams of 2019

Scammers prey on trader greed. With that said, here are some of the biggest crypto scams and hacks of 2019:

Japanese cryptocurrency exchange, BITpoint got hit the hardest in 2019 when a total of $28 million was stolen in July. About $19.3 million of the total amount was stolen from customers of the exchange. The remainder of the stolen funds belonged to the exchange itself. Amongst the stolen cryptos were Bitcoin, Ether, Litecoin, XRP and Bitcoin Cash. Fortunately, customers of the hacked exchange were reimbursed.

The “typosquatting” scam in the Netherlands and the UK saw cryptos to the value of $27 million stolen. More than 4 000 victims across 12 different countries fell for the scam. A fake online cryptocurrency exchange was created that allowed the scammers access to users’ Bitcoin wallets. Meanwhile, five men and one woman have been arrested in connection with the crime.

One of the world’s largest cryptocurrency exchanges, Binance, got hacked in May 2019 and $40 million worth of Bitcoin was stolen. The 7 000 Bitcoins amount to only 2% of the exchange’s holdings and user losses were covered by the exchange’s self-insurance fund, SAFU.

How to protect yourself against cryptocurrency scams

Avoid unreputable brokers, exchanges and wallets

If something sounds too good to be true, it usually is. If someone tries to lure you to a particular broker, exchange or wallet with promotional offers that sound too good to be true, be wary. Once you have registered on the site and deposited funds, it may become very difficult to withdraw funds or they might simply steal your money.

Then there is also the fake wallet app that users can download. Even though they are available in Google Play, do your own research before simply downloading anything to your phone. This counts for all brokers, exchanges and wallets. DYOR (Do Your Own Research).

Watch out for phishing emails

Even though phishing emails is an old scam, a lot of people still fall for it. Victims receive unsolicited emails from crypto exchange or wallet providers that encourages them to click on a link that will take them to an identical site of the exchange or wallet they make use of. This way, the scammers can steal your account details and use it to gain access to your real account. The best way to avoid this scam is to double- check the URL of the website your visiting. Also, bookmark the exchange or wallet site to avoid accidentally logging onto a phishing site. Ensure the web address starts with https, for example

Stay clear of ponzi schemes

As previously stated, scammers prey on trader greed. This is especially true of ponzi schemes that promise unusual high returns. A promoter will convince people to invest in their scheme. These investors will then receive returns on their investment but in actual fact this is money that has been deposited by newer investors. Initial investors are now convinced that the scheme is legit and put even more money into the scheme. Eventually, the promoter will run out of money and the scheme will collapse. Everyone wants to earn extra money and these schemes are very tempting but alas, one should not fall victim to them.