You might have heard of Cryptocurrency before, but how much do you really know?
As cryptocurrency investments continue to rise in popularity, so does the risk of falling victim to scams. Fraudsters are seizing the opportunity presented by the growing interest in crypto assets. Let’s take a look at why cryptocurrency can be an avenue for fraud and what you should look out for to protect yourself.
Cryptocurrencies like Bitcoin and Ethereum (a digital currency like Bitcoin) are especially attractive to scammers due to their decentralised and difficult-to-trace nature. Australian Competition and Consumer Commission (ACCC) Deputy Chair Delia Rickard has noted that “investment scams are more prevalent than ever, and scammers are capitalising on interest in cryptocurrency in particular.” Adding to the risk, the volatility of cryptocurrencies means values can fluctuate dramatically, leaving no guarantees of returns. If you fall victim to a crypto scam, recovery of lost funds is highly unlikely.
Cryptocurrency scams typically fall into three major categories, as outlined by Moneysmart.gov.au:
Fake investment opportunities
Scammers often create fraudulent crypto schemes that appear convincing. Warning signs include:
- Promises of high and fast returns.
- Fake endorsements from celebrities or government agencies.
- Unsolicited contact via social media, texts, or dating apps.
- Requests for fund transfers to individuals rather than businesses.
- Frequently changing or multiple bank accounts for payments.
Phishing scams
Fraudsters impersonate legitimate cryptocurrency platforms through emails or messages. Victims are lured to fake websites where their personal information and funds are stolen.
Romance or trust-based scams
These scams involve building personal relationships, often via dating apps, to convince victims to invest in fake cryptocurrency schemes.
If you’re considering diving into the cryptocurrency market, follow these safety tips:
- Do your research: Understand how cryptocurrency works and use only reputable, well-reviewed exchanges. Check online reviews to verify legitimacy.
- Avoid suspicious links: Do not click on ads, open spam emails, or respond to unsolicited messages related to crypto investments.
- Protect your wallet keys: Never share your cryptocurrency wallet keys, account details, or bank account access with anyone.
- Secure your devices: Avoid letting strangers assist with setting up trading platforms or accessing your computer remotely.
To further protect yourself, consider these actionable strategies from Moneysmart.gov.au:
- Be wary of social media advertisements or celebrity endorsements promoting cryptocurrency investments.
- Search for the token or exchange name online alongside terms like ‘scam’, ‘review’, or ‘warning’.
- Verify legitimacy by checking for Australian Transaction Reports and Analysis Centre (AUSTRAC) registration numbers for Australian digital currency exchanges.
- Inspect websites carefully, paying attention to contact details, spelling errors, and promises of instant rewards.
- Be cautious of businesses or individuals who demand payment exclusively in cryptocurrency.
Cryptocurrency can offer exciting investment opportunities, but it also presents significant risks. By staying informed and practising safe investment habits, you can minimise your exposure to scams and safeguard your assets. For additional information, visit Crypto Scams – Moneysmart.gov.au.
