The amount of money changing hands in the global cryptocurrency market is increasing exponentially, moving towards $1 trillion in value. Not surprisingly, this large amount of money attracts people running scams. Cryptocurrency is a loosely regulated environment, and it’s global, so criminals and unscrupulous individuals have found ways to dupe investors and avoid prosecution and other negative consequences. Investors should follow these guidelines for avoiding cryptocurrency scams:
Find Reputable Investment Vehicles
There are hundreds of Bitcoin and cryptocurrency exchanges and wallet providers in the marketplace, which makes it difficult for investors to weed out the disreputable from the legitimate. Millions of recent cryptocurrency investors use services such as Coinbase, which enables credit and debit card purchasing. Coinbase allows users to create secure wallets and rely on the technology offered by an established and reputable firm. Avoid picking a wallet provider or exchange that hasn’t been around for a few years. Also, perform a quick online search to see if an exchange or wallet provider you are considering has been the subject of a breach or other security problem.
Some fake exchanges and wallet providers will create websites and landing pages that look like legitimate outfits, but are actually counterfeit. It’s a form of phishing scheme where the crooks simply want personal information and payment data. Investors should not be so eager to cash in on cryptocurrency gains that they forget common sense and the need for proper due diligence.
Avoid Most ICOs
Initial Coin Offerings (ICOs) are a way for companies to raise (potentially massive) funds through the offering of their own cryptocurrency token in exchange for cash or another established currency. These ICOs offer the promise of returns for investors, but they’re also fraught with scammers. It’s relatively easy for scammers to create a fake company and generate interest in a technology or service in advance of a fraudulent ICO. The Securities And Exchange Commission (SEC) and other agencies are clamping down on ICO fraud by halting funding rounds and exposing scammers with criminal backgrounds.
Watch out for Crypto-Malware
Hackers have developed malware that infects a user’s computer not for the purpose of stealing credit card or personal data, but to actively steal Bitcoin. This malware works by taking the user’s wallet credentials or interrupting and stealing future transactions.
Another type of malware sits silently on computers and smartphones, infiltrating web browsers and using your processing power to conduct cryptocurrency mining for the hacking organization. This stealthy type of attack can involve hundreds of thousands of machines and provides the hackers/miners with a powerful tool to generate cryptocurrency.
Avoiding cryptocurrency scams means doing your homework and staying away from “too good to be true” claims. One way to gain more exposure to cryptocurrency is by investing through IRA companies that securely offer long-term-focused investments in Bitcoin, Ethereum, Litecoin, and other established cryptocurrencies.