Expert tips to spot, avoid scams amid new crypto launches

Dubai: The growing popularity of cryptocurrency attracts a surge in scammers looking to exploit new investors.

As cryptocurrency continues to make headlines, Gabriele Asaro, Head of SEO and Research at crypto onramp platform Instaxchange.com, shares essential tips to help investors navigate this dynamic space safely and avoid falling prey to scams.

1.    Beware of Pump-and-Dump schemes

This type of scam works by artificially raising the price of a stock, or cryptocurrency, by increasing its popularity, at which point they tell you to invest in it, before selling your investment off and gaining money from this.

However, insiders will have bought this crypto before you were involved and sell it off to you during this initial ‘pump’ to make a profit. The scam then works as you are unable to make a profit after this initial surge in price as the value quickly crashes, and you are told you were not fast enough selling your share.

Meme coins often experience sudden price surges due to hype, making them potential targets for pump-and-dump schemes. While the coins are not advertised as good investments, it is still something to be aware of.

2.    Avoid sending crypto to strangers

Romance scams compiled more than $185 million in crypto losses from 2021 to 2022, and that figure has likely gone up in more recent years.

Romance scams work when a con artist pretends to be someone else and creates a relationship with an individual, gaining their trust before gradually beginning to ask them for money to finance things like hospital bills, essential travel, or general bills that are fraudulent.

And it’s not only through romantic persuasion that the scammers target you, they may impersonate celebrities or public figures to get you to part with your money.

Predators ask vulnerable people for money, and so it is vital to remind yourself and loved ones to never send money to anyone you have not met in real life, even if you have heard their voice through a call or seen a picture of who they claim to be.

Cryptocurrencies are non-refundable, and you cannot stop a payment once it has gone through, so it is vital you never send any money to a source you cannot verify is trustworthy.

3.    Stay wary of investment scams

The Instaxchange expert says that while many believe they would recognize a romance scam, plenty of people will fall victim to investment scams without realizing the fraud behind it until it is too late.

Investment scams, the number one area where crypto users are losing their money - as of the latest figures, $575 million was lost between 2021 and 2022 - occur when a fraudulent individual, pretending to be a high-profile figure usually, contacts you with promises of high returns on money.

Scammers will contact you randomly, often through social media but it can be through email or phone, and tell you to invest on their site. They will lure you in with promises of quick returns but what they are really doing is getting you to ‘invest,’ then withdrawing this money for themselves.

Be mindful of these and do your research before you invest in any form of crypto. Those who promise fast money are always scammers.

4.    Verify the source of contact

Imposter scams lost US citizens over $752 million last year, with $133 million being crypto losses, therefore it is imperative to check the details of those contacting you regarding payments.

One way imposters will try to catch you is by pretending to be from a company or government body demanding you send them money, and they can be very convincing.

If there is a link in an email to a site, you can double-check if it is real by hovering your mouse over the URL - a fake URL will read as such when your mouse rests on the link.
As well as this, many email providers will show the real email address in the ‘from’ field, which you can compare against any contact details on official sites.

5.    Avoid and report blackmail attempts

Asaro also highlights the dangers of blackmail scams, where fraudsters claim to have compromising information about victims. These schemes rely on fear to extort cryptocurrency payments.

Most of the time, these threats are baseless. Do not engage—report the message to the platform or the authorities immediately and ensure you do not fall victim to any form of blackmail.

While scammers may be able to access some information on you (such as your IP address or other basic details), they cannot control your actions unless you allow them to.

Commenting on keeping yourself safe with crypto, Asaro added:

“Crypto can be a safe and secure currency. Millions of people are beginning to use and become knowledgeable about how it works, yet there will always be scammers looking to make money maliciously. Fraudsters love jumping on popular coins as it is a great way for them to trick citizens out of their hard-earned money.

“It is unfortunate that many fall victim to scams and even more so that experienced users would dedicate time to taking advantage of those newer to crypto. However, it is easy enough to ensure you do not lose money by remembering to verify sources, check if a site is trustworthy, and never send money to a person you have not met in real life.”