2022 was a bad year for crypto. Some say that it was catastrophic. However, it is still a massive industry with a total market cap close to $1 trillion. In 2018, many Bitcoin holders turned into millionaires and billionaires overnight creating a huge fear of missing out on millions of people from all across the globe. The new “Bitcoin” rush was a storm that left many in financial ruin. A big part of this catastrophe was the increase in scams related to Bitcoin.
Why do these scams exist?
The vast majority of crypto users are not technically savvy and may have trouble navigating the difficult technological jungle of the industry where you need to know how to protect your savings, make transactions, and use tokens. Blockchain is an old technology, but cryptocurrencies based on it are quite new and spreading awareness about them is quite hard despite the best efforts of the crypto community.
The fact that people do not understand how Bitcoin works and how to use it does not stop them from trying to invest in BTC. The lack of education and negligence on the part of users who do not conduct their research are reasons why so many scammers manage to successfully steal money from their victims.
The FTC reports that over $800 million is stolen annually from users of social media platforms. The true scope of the problem is much larger since many cases are unreported (people feel ashamed that they were scammed) and data from other sources are not lumped together with cases from social media platforms. Numbers indicate that people are easily tricked into putting money in shady businesses and Bitcoin gurus.
Most common types of Bitcoin scams
Whenever you are on social media, reading the word “Bitcoin” should be a warning sign already. The crypto industry is established well enough to not require any additional advertising and promotions on social media platforms. Large CEX platforms dedicate enough resources to marketing to avoid using influencers to do their bidding.
Nevertheless, Bitcoin scammers manage to trick people into thinking that they will receive unimaginable riches for free. Below are several most commonly employed methods.
- Offering free BTC. A scammer poses as an influencer. They can buy an already big social media account or create one by using bots. A scammer contacts you and promises to give you some BTC because there is an ongoing promotion. The only thing that they will ask is for you to pay a relatively small sum of money to verify your account. Then, they disappear.
- Invitations to fake CEX platforms. Fake crypto exchanges are an easy way for a scammer to trick people who do not know much about the industry. If you are unfamiliar with already established brand names like Kraken, KuCoin, ByBit, Binance, and others, you may believe that a fake website promoted by someone you contacted on social media is the real deal. However, after you make your first deposit, scammers simply stop answering your messages.
- Luring you into Ponzi schemes. A variety of companies like BitConnect makes money by creating a financial pyramid where users are invited to a collective of investors who are buying Bitcoin and split profits between themselves. It is a Ponzi scheme where the biggest attraction is the word “Bitcoin”. In reality, these systems do not work and never intend to generate profits.
How to recover money lost to Bitcoin scams?
The worst thing about any crypto scam is that you cannot tell your bank to cancel a payment because you are sending money to a person or receiving goods in exchange from companies that do not have any return policies.
In many cases, the only possible course of action is to go to a specialized company that will try to track down scammers and recover lost funds using grayish methods. Even going to the police won’t yield any good results.