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Here is a rundown of important Bitcoin scams that have dotted its ecosystem in recent years. Previously cryptocurrency exchanges were the main sources of crypto wealth for hackers. Now hackers have directed their attention to other places, such as online crypto wallets, as well. One of the biggest such hacks occurred in June , when hackers stole 1 million customer email addresses by breaching the email and marketing databases for Ledger, a France-based crypto wallet company.
They also stole personal details for 9, customers and published , of the customer email addresses on a website for hacked databases. At the end of , cryptocurrency exchange Poloniex suffered a similar breach and had to email its customers asking them to reset their passwords.
Social media has become a potent and powerful force in mainstream society. And so, it is not surprising that hackers are using social media's reach to target Bitcoin holders. They have taken to creating fake social media accounts to solicit Bitcoin from followers or directly hacking popular Twitter accounts. Perhaps the most famous instance of this occurred in July when Twitter accounts belonging to famous individuals and companies were hacked. They promised that user funds would be doubled and sent back as a charitable gesture.
According to reports, transactions occurred within minutes of the tweets being posted. Twitter is not the only social media platform afflicted with Bitcoin scams.
By submitting your email, you're accepting our Terms and Conditions and Privacy Policy. The vitcoin fees often vary between 0. They also stole personal details for 9, customers and published , of the customer email addresses on a website for hacked databases. OCCRP and its partners have unpicked how consumers from around the world are being funneled from harmless-looking ads towards risky, sometimes fraudulent, investments. Bank wire transfers, bank card top ups and using different payment suppliers usually prices cash even before beginning the buying and selling exercise on the bitcoin exchange platform.
Video sharing platform YouTube has a similar problem. In July , Apple co-founder Steve Wozniak filed a lawsuit against Google because his conversations regarding Bitcoin were being featured in cryptocurrency giveaway scam videos. Such videos also promised to double crypto amounts for users who promised to send their coins to a blockchain address mentioned in the video. Seventeen other individuals have also filed a lawsuit against YouTube because they were duped by cryptocurrency giveaway videos.
Social engineering scams are scams in which hackers use psychological manipulation and deceit to gain control of vital information relating to user accounts. Phishing is widely used in social engineering scams. In phishing, hackers send an email to targets with fraudulent links to a website specially created to solicit important details, such as bank account information and personal details, from their targets.
Within the context of the cryptocurrency industry, phishing scams target information pertaining to online wallets. Specifically, hackers are interested in crypto wallet private keys, or keys required to access funds within the wallet. Their method of working is similar to that of standard scams.
An email is sent to wallet holders that leads to a fake website specially created to ask users to enter private key information. Once the hackers have this information, they can steal Bitcoin and other cryptocurrencies contained in those wallets. Another popular social engineering method used by hackers is to send Bitcoin blackmail emails.
In such emails, hackers claim to have a record of adult websites visited by the user and threaten to expose them unless they share private keys. The best way to stay safe from phishing scams is to avoid clicking on site links in such emails or verify whether the email address actually belongs to the said company by calling them up or checking the email syntax.
For example, users should check whether the linked web address is encrypted i. Visiting unsecured websites is a bad idea. ICO scams proliferated at the height of cryptocurrency mania in and After an intense SEC crackdown, the numbers of such scams have decreased. However, they refuse to die out completely. As recently as late , the federal agency was still continuing its crackdown against such scams. There are several ways in which scammers can separate investors from their bitcoin in an ICO scam. It's a good idea to be super-cautious about what programs you allow to have administrator access on your devices.
An up-to-date, reputable virus scanner can also help but is not foolproof. When buying or selling bitcoin locally, a counterparty may ask you to meet in person to conduct the exchange. If it isn't a trusted party that you already know, this is a very risky proposition that could result in you getting robbed or injured.
Con-artists have also been known to exchange counterfeit fiat currency in exchange for bitcoin. Consider using a peer-to-peer platform to escrow the funds in place of meeting in person. Do not reply to emails or inbound communications from strangers telling you they need help moving some money, whereafter in exchange for your services, you'll get a portion of the funds.
Beware of emails purported to be from services you use soliciting you for action, such as resetting your password, or clicking through to provide some sort of interaction with regard to your account. It can be very difficult to spot the difference in a fake email that's trying to entice you to compromise your account, and a legitimate one sent on behalf of a product or service that you use. Phishing websites often go hand-in-hand with phishing emails.
Phishing emails can link to a replica website designed to steal login credentials or prompt one to install malware. Phishing websites may also appear as sponsored results on search engines or in app marketplaces used by mobile devices. Be wary that you aren't downloading a fake app or clicking a sponsored link to a fake website. Do not participate in offerings where one or more people offer you a guaranteed return in exchange for an upfront deposit.
This is known as a ponzi scheme, where-in future depositors' principals are used to pay previous investors. The end result is usually a lot of people losing a lot of money.
A pyramid scheme promises returns to participants based on the number of people they invite to join. Never invite your personal network under the sole goal of accumulating rewards or returns from a product or service, and do not contribute your own capital at the behest of others to accelerate the process. Similarly to free giveaways, prize giveaway scams trick people into taking action or supplying information about themselves. For example, supplying a name, address, email and phone number in order to claim a prize.
This can allow a hacker to attempt to use the information to gain access to accounts by impersonating you. Do not trust people who entice you or others to invest because they claim that they know what the bitcoin price is going to be. In a pump and dump scheme, a person or persons try to artificially drive up or pump the price so that they can dump their holdings for a profit.
This is a type of malware that partially or completely blocks access to a device unless you pay a ransom in bitcoin. Why would exchanges dishonestly inflate their volumes?
One incentive may be to attract ICO initial coin offering projects that want to be listed on exchanges that are facilitating lots of trading. To list such projects, some exchanges charge fees that can be as high as a few million dollars. There are at least two important takeaways here.