With any investment such as cryptocurrency, there is the potential for scam.
So it pays to be cautious.
Phishing for Coins
A scam once referred to a CoinHoarder netted $50 million in cryptocurrency theft over three years using a phishing scam. “The campaign was very simple and after initial setup the attackers needed only to continue purchasing Google AdWords to ensure a steady stream of victims. This campaign targeted specific geographic regions and allowed the attackers to amass millions in revenue through the theft of cryptocurrency from victims. This campaign demonstrates just how lucrative these sorts of malicious attacks can be for cybercriminals,” noted CoinDesk.com.
To pull off this stunt, those behind the attack created fake sites similar to BlockChain.com. The sites had different domain names such as “block-chain.info” and “blockchien.info.”
Initial Coin Offering (ICO) Fraud
ICOs have quickly grown in popularity. In fact, according to a report from PwC there has been $13.7 billion in ICO activity so far in 2018.
While that may sound incredible, we have to consider that the ICO market is greatly unregulated, creating further risk. With risk comes the potential for scams.
U.S. SEC Commissioner Robert Jackson highlighted such concerns in April 2018. In fact, he noted that the cryptocurrency space “has been full of troubling developments that we’ve seen at the SEC, and especially the ICO space,” adding, “Investors are having a hard time telling the difference between investments and fraud.”
For example, a scammer can create a fake ICO and steal any money that investors give them.
This happened in December 2017 when PlexCoin allegedly stole $15 million, making promises of a 13-fold profit in less than a month. Sure, PlexCoin offered eye-popping returns, but its claims about employing a global team of experts were not true, according to the U.S. Securities and Exchange Commission.
Ponzi and Pump-and-Dump Schemes
In January 2018, the U.S. Commodity Futures Trading Commission (CFTC) filed litigation against the backers of My Big Coin, a cryptocurrency scam involving a nonexistent coin and payouts to initial investors that relied on funds from previous investors. Even lending/exchange service Bitconnect, which promised giant returns on cryptocurrency “loans” made to the platform, was flagged as a Ponzi scheme and just announced it would be shutting down.
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