As of July 2019, bitcoins were worth nearly $12,000. The value of the virtual currency attracts many to try their hand at mining, trading or investing. However, as with other monetary-based industries, the market is not without scams. In 2018, millions of investors reportedly lost billions of dollars after succumbing to cryptocurrency scams. The con artists implement a variety of tactics in order to make a profit.
Many online users are familiar with malware and the problems that the software causes. Malware has also being used in the cryptocurrency circles. In relation to the cryptocurrency world, the programs gain access to online wallets by monitoring addresses and insert the address of a scammer. Once inside a wallet, the criminals drain the account. Some scammers go as far as infecting computers and using them to mine cryptocurrency unbeknownst to the individual.
There are exchanges that misrepresent themselves as being reputable. The main goal involves separating clients from their money. Some advertise unbelievable promotions to attract unwitting consumers to the site. Others seduce visitors to create accounts and deposit money in exchange for bonuses. However, once the criminals have the money, they charge exorbitant fees for withdrawals.
Many have found that cloud mining saves the expense of having to buy and operate mining hardware.
There are some reputable cloud mining services available that rent server space. But, there are many scam services. They may promise ridiculous returns. However, they fail to explain the hidden fees needed to mine. Some are simply Ponzi schemes that collect a client’s money and encourage them to invite others to join. The scam proprietors are the only ones who profit.
A group of individuals coerces potential clients to invest in the offer. The new investors, in turn, encourage others to invest. The initial investors may receive some monetary gain, which influences them to invest more. However, the only ones making a profit are the scammers who originally created the scenario. Eventually, the program falls apart when the criminals drain the pot dry.
Pump and Dumps Schemes
The situation begins with a group of individuals who buy a particular coin in large quantities, which raises the price of that coin. Investors falsely believe that the coins are worthwhile investments and begin buying them at the inflated price. The scam group then sells their coins to take advantage of the profit.