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5 Ways to Avoid the Menace of Cryptocurrency Mobile Fraud

18 November 2019 14:58, UTC
5 Ways to Avoid the Menace of Cryptocurrency Mobile Fraud
By Michael Usiagwu

Cryptocurrencies are profitable, but they are also complicated. If you are new to it, you will likely find the whole process confusing. This confusion, coupled with light regulation makes cryptocurrencies an ideal target for fraudsters. A huge list of cryptocurrency fraud has occurred, here are some of the most remarkable examples:

  • February 2019. Coinmama is one of the largest crypto brokers, servicing a total of 1.3 million active users. On February 15th, their customer database was hacked, which led to over 450k user emails and passwords leakage. Sensitive data of the exchange accounts of cryptocurrency investors was accessed.
  • May 2019. The  CEO Changpeng Zhao concurred in a post that hackers withdraw 7,000 BTC (currently over $40 million) having used several tactics of phishing and malware, which allowed them to obtain a large number of users 2FA codes and API keys.
  • January 2018. One lasting effect cryptocurrency fraud that happened in 2018 occurred at CoinCheck, one of the leading Japanese crypto trading platforms. Hackers outside the country infected the internal network of the exchange with a virus that was transmitted through email, and it allowed them to steal private keys. As a result, 523 mln NEM coins were stolen for $533 million at the time of the theft.

Protecting yourself from crypto scams requires some essential knowledge and information. In this post, we shall be discussing some of the most popular cryptocurrency mobile frauds and how you can avoid them.

Dangers of Cryptocurrency

Contrary to what major crypto investors have said about the security of the cryptocurrency platform, cryptocurrency is less protected than other traditional securities markets. With that in mind, let’s consider some of the most popular cryptocurrency mobile frauds. They include:

  • Phishing
  • Fake wallets
  • Dishonest ICOs
  • Malware
  • Ponzi schemes

Now, let's examine each of these scams and how to avoid them.

Phishing

Phishing is a classic scam that is used in different sectors and not just cryptocurrency. It is a scam that has been used to target folks from different walks of life, including banks.

The scam involves the sending of unsolicited email that looks like the real deal from your financial institution. In a bank scam, it is created to look like a message from your bank. However, in the case of cryptocurrency, it is built to look like a real message from your wallet provider. This fraudulent email appears almost exactly like a legitimate email. It usually contains a link that redirects you to a similarly fake website that looks like the real deal from your crypto exchanger.

The website will almost always request vital personal information like your account details. Once this information is obtained, the fraudsters can gain access to your account and disappear into thin air with all your funds. 

In lieu of this, some crypto platforms have been able to add some software so as to identify this theft. In a release by Marketwire, CEO of Wirex, Pavel MATTHEW said: 

“We have entered a new age in which conventional regulated financial frameworks and the new token economy must coexist. By uniting the existing and future financial ecosystem, Wirex occupies a unique position in the industry – we believe it is our duty to deliver innovation and choice to our customers whilst ensuring the security of their money and data. We are delighted to work with Elliptic and contribute to creating a safer environment for all.” 

Other ways to avoid this phishing theft are listed below.

  • Carefully analyze URLs for signs of fraudulent websites.
  • Do not open unsolicited or suspicious-looking emails.
  • Do not reveal your private key to anyone.

Fake Wallets

Fake wallets are verily similar to phishing scams. These wallets come to crypto owners, posing as legitimate exchanges or wallets. However, they are far from legitimate and only aim to defraud owners from their money.

These wallets come promoting ludicrously profitable offers. Some are subtle, while others come out boldly, urging you to deposit funds into an account. To further convince you, they usually offer bonuses for large deposits. However, once you fall into the trap of depositing money into an account, the jaws close and your money disappears. Other subtle fraudsters create mobile wallets that, once downloaded, can steal critical account information. Some are so good that they even exist in official app stores.

How to avoid fake wallets:

  • Use only wallets that you are sure of.
  • Do your research before choosing an exchange or wallet.
  • Be careful with downloading a near same app from the app store: download only software and apps from legitimate wallet providers.

Ponzi schemes

Ponzi scheme is a simple tool used by fraudsters. Despite the simplicity (or perhaps because of the simplicity), it is effective. This fraud is especially effective when used for those who seek an extra investment profit after their actual profit. It appeals to investors, promising unusually high returns on investments.

The promoter persuades people to invest in the scheme. At first, these initial investors might receive high returns, but these returns are from new investors. On seeing gains, the investors pump in more money until the scheme becomes unsustainable. At this point, the fraudsters would have disappeared with as much money as possible.

How to avoid Ponzi schemes:

  • If the ROI looks too good to be true, it probably is.
  • Avoid cryptocurrency projects that encourage you to actively seek out new members before you can enjoy more substantial profits.

Dishonest ICOs

Since the emergence of cryptocurrency, every investor has been on the lookout for the next cryptocurrency. Early adopters of Bitcoin can testify to the profits raked in as a result of the massive explosion in the price.

If you are looking to buy the ‘next big thing,' the most straightforward option is usually to purchase coins in an ICO or IEO (when you are a contributor/user of the exchange platform). Fraudsters know this and have developed fake ICOs which appear genuine, and with some persuasive marketing, many people have fallen victim of this fraudulent scheme. Before investing in an ICO, remember that the risk of failure is high, even if it is legitimate.

How to avoid fraudulent dishonest ICOs:

  • Research every ICO earnestly before investing. Check out essential things like the white paper, the team, and other specifics.

Malware

27.08.2019  |   in Data security
Online scammers have found malware to be an active effective tool in perpetuating their fraudulent activities. They have found an even bigger market in cryptocurrency space due to a large amount of money people invest in it. Malware created for cryptocurrency scams is designed to access your online wallet and steal your money, infect your computer with a crypto miner, or even replace your address with that of a scammer.

How to avoid malware:

  • Regularly update your antivirus.
  • Delete any suspicious attachments in emails.

Conclusion

Cryptocurrency can be a rewarding investment despite the dishonest people that seek to use different methods to swindle you out of your money. Use the information in this post to keep your information and your funds safe.



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