The Truth About Cryptocurrency Scams

The recent buzz around cryptocurrency has resulted in an upsurge of scams targeting interested investors. Also, hacking and theft have resulted in an estimated loss of  980,000 Bitcoins (or approximately 15,000 American dollars) since 2011. As a result of all of the scams, theft, and hacking, significant corporations such as Facebook have taken action to protect the online space.

Common Cryptocurrency Scams

Bitcoin is one of the most common forms of cryptocurrency and is sometimes referred to as a “gateway” currency which provides a bridge between fiat currency and alternative currencies. Because of this, Bitcoin scams are common. For example, the “Bitcoin Gold Wallet” scammers convinced victims to store Bitcoin in a fraudulent online wallet. The perpetrators then stole the money.

Other schemes include cell phone identity theft, in which a mobile account is hijacked and mined for stored currency. Cryptocurrency can be stored in mobile apps, so if a criminal gets possession of the mobile account, they have access to stored currency. Offenders may also create fake wallet apps, and take advantage of victims by luring them into depositing money.

Facebook’s Ad Policy

Because of all of the fraudulent activity surrounding cryptocurrency, the social media mogul Facebook has banned any ads related to financial products and services. The rules are intentionally broad so that the Facebook security team has the legal footing to deny suspicious advertisers.

What To Watch Out For - Fraudulent White Papers

For those who want to invest in Cryptocurrency, there are a few red flags to watch out for regarding scams. Also, an investor needs to research the currencies white paper, which is a document that provides information about the company that is creating the money.

Just because an initial coin offering (ICO) has a white paper, doesn’t mean it is legitimate. Some white papers include stolen identities. This was the case with the paper for Prodeum, an ICO that listed blockchain expert Petar Jandric as involved in the project. Jandric denied involvement.

The problem of security within the cryptocurrency economy goes deep. On the surface, there are issues like fake wallet apps and mobile phone hacking. Farther within the system we see supposed alternative coin offerings that are rotten at the core. Companies that control online spaces, such as Facebook, react to scams by tightening security. Individuals also need to be aware that these scams exist.