Here are some of the most common cryptocurrency scams and ways to avoid becoming a fraud victim.
Investment scams involve getting you to part with your money on the promise of a questionable financial opportunity.
Unfortunately, scammers target people that want to explore cryptocurrency investment.
There are various methods utilised by the scammers which are constantly evolving in a bid to evade detection.
To illustrate how these scams usually work, please see the story of Julia and David below:
Julia receives a WhatsApp message from someone named ‘Gilbert’ claiming to be able to invest her money through his “state of the art investment platform”. Gilbert promises high returns for very low risk. Julia agrees to purchasing Bitcoin and transferring it to Gilbert.
Julia trusts Gilbert given he sounds knowledgeable and uses a lot of financial terminology which is impressive to Julia.
As Julia invests an initial small amount she is fed claims of high returns by Gilbert as long as she keeps depositing more funds to the Bitcoin wallet addresses.
Gilbert even provides Julia access to an “account” on his website to showcase how Julia’s returns are “growing”.
Julia starts depositing more and more funds to the nominated wallet account. However, Julia is not receiving the promised high return after many months of “investing”.
Even though Julia becomes worried and suspicious, she does not seek support or report the scam. In desperation, Julia submits more payments in the hope of some return.
As Julia begins to demand the return of her funds, she is no longer able to maintain contact with Gilbert and her portfolio is closed.
Julia has no way of recouping the funds due to the irreversible nature of the cryptocurrency transactions.
David receives an advert to his email address which claims to provide cryptocurrency investment guidance and high returns. After David responds to the email, his newly dedicated “money manager” Delilah is in contact and instructs him to create a trading account with a major cryptocurrency exchange.
On Delilah’s instruction, David purchases cryptocurrency to his exchange wallet.
Delilah is very helpful and David trusts her more and more. After reaching a certain amount of purchases, Delilah contacts David on the phone and uses remote access technology to take control of his computer. David provides Delilah his one-time password codes to access the cryptocurrency exchange account and allows her to transfer the funds to an outside wallet.
After this interaction, David never hears from Delilah again and the contact details she provided are not responded to.
David loses all his investments and as cryptocurrency transactions are irreversible, the exchange cannot retrieve his coins.
Please note that Banxa will never send you any unsolicited emails or call you to ask you to purchase cryptocurrency!
Criminals use phishing emails, text messages and phone calls to gain personal identity information like login credentials for banking or email accounts. Phishing emails and text messages often have links or attachments that download malicious software onto your device, or ask you to process a payment. These messages may look legitimate, but there are ways to tell if they’re not.
Usually, phishing email or SMS messages:
- Appear to come from a known organisation or contact, but may be from a sender you have never met;
- Aren’t addressed to you individually;
- Have a link or button to click on, ask you to hand over personal details, open an attachment or process a transaction.
Usually, in a phishing phone call:
- The caller says they are from a bank, a large service provider like Microsoft, a phone company or your domestic tax office;
- They may know some of your personal details like your name and email address and use it to gain your confidence, or offer to let you speak with their ‘manager’;
- They may ask you to purchase cryptocurrency to pay for the “service” they have provided.
What to do if you’re targeted by a phishing scam?
- If you receive a Banxa-branded phishing email message, please report it to firstname.lastname@example.org or submit a ticket to report a scam here.
- If you believe a phishing scam has resulted in you transacting with Banxa please report it to email@example.com or submit a ticket to report a scam here. Also report this to your bank immediately.
- If you’ve provided personal or banking details or started a transaction in response to a phishing message, please report it to your bank and your bank can reach out to us via firstname.lastname@example.org.
Romance and Relationship Scams
In today’s world, and especially since the impact of COVID-19, more and more people are going online to form friendships or romantic relationships.
Unfortunately, scammers are lurking on popular social media sites to take advantage of people. They prey on people’s trusting nature to establish a friendship or a romantic relationship.
These relationships may begin as friendly or flirtatious chat and then over time turn financial.
Scammers will convince people that they should send them cryptocurrency to provide support with a variety of made-up but seemingly important issues.
How to know if your friend/partner is a scammer:
- You’ve never met them in person.
- They prefer communication via email or chat and their occupation implies work locations that make them hard to be reached.
- They require funds for family emergencies or to purchase travel and accommodation to come and visit you. Which always falls through for some reason.
- The longer the relationship goes on, the more funds they request from you.
- They may even send you small gifts to continue to gain your trust.
- There is always a reason or excuse for why they cannot video call that day or why they cannot come visit.