As you become involved in the new digital monetary mechanisms known as cryptocurrency, it doesn't take long to recognize there's risk involved in these transactions. And we're not talking about the volatility of the market. Scams are everywhere online, and cryptocurrency exchanges are no different. As you consider investing in different startups and exchange platforms, be aware of the possibilities of losing your cryptocurrency investments.
Lots of Indian nationals have started investing in cryptocurrencies, many of them young, reports of frauds are starting to rise. From fake giveaways to bogus initial coin offerings and identity thefts, fraudsters are trying every ploy in the book to fleece new-to-crypto investors.
No official data exists on India’s cryptocurrency ecosystem — not on investments and not on frauds. These tokens continue to exist in regulatory no-man-lands. But ask around and you know the interest is high. And so are the complaints about fraud.
4 Common Cryptocurrency Scams and How to Avoid Them
When you're looking into digital cryptocurrency companies and startups, experts recommend that you confirm that they're blockchain-powered, which means they track detailed transaction data. Also, check that they have solid business plans that solve real problems. Companies should specify their digital currency liquidity and ICO rules. There should be real people behind the company. If the startup you're investigating lacks some of these characteristics, think through your decision even more carefully.
Here's in a look at the more common scams and ways to avoid becoming a victim as you join the exciting future of cryptocurrency.
1- Imposter Websites
You may be following a solid tip from someone with a lot of expertise but still become a victim by accidently visiting a fake website. There's a surprising number of websites that have been set up to resemble original, valid startup companies. If there isn't a small lock icon indicating security near the URL bar and no "https" in the site address think twice.
Even if the site looks identical to the one you think you're visiting, you may find yourself directed to another platform for payment. For example, you click on a link that looks like a legitimate site, but attackers have created a fake URL with a zero in it instead of a letter ‘o’. That platform, of course, isn't taking you to the cryptocurrency investment that you've already researched. To avoid this, carefully type the exact URL into your browser. Double check it, too.
2- Fake Mobile Apps
Another common way scammers trick cryptocurrency investors is through fake apps available for download through Google Play and the Apple App Store. Although stakeholders can often quickly find these fake apps and get them removed, that doesn't mean the apps aren't impacting many bottom lines. Thousands of people have already downloaded fake cryptocurrency apps.
While this is a greater risk for Android users, every investor should be aware of the possibility. Are there obvious misspellings in the copy or even the name of the app? Does the branding look inauthentic with strange coloring or an incorrect logo? Take note and reconsider downloading.
3- Bad Tweets and Other Social Media Updates
If you're following celebrities and executives on social media, you can't be sure that you're not following impostor accounts. The same applies to cryptocurrencies, where malicious, impersonating bots are rampant. Don't trust offers that come from Twitter or Facebook, especially if there seems to be an impossible result. Fake accounts are everywhere.
If someone on these platforms asks for even a small amount of your cryptocurrency, it's likely you can never get it back. Just because others are replying to the offer, don't assume they aren't bots, either. You have to be extra careful.
Avoid Telegram Groups that promise Guranteed returns or get rich quickly schemes.
My clients have been trapped by such social media scams but luckily we were able to retrieve and save them thousands of dollars.
4- Scamming Emails
Even if it looks exactly like an email you received from a legitimate cryptocurrency company, take care before investing your digital currency. Is the email the exact same, and are the logo and branding identical? Can you verify that the email address is legitimately connected to the company? The ability to check on this is one reason why it's important to choose a company that has real people working for it. If you have doubts about an email, ask someone who works there. And never click on a link in a message to get to a site.
Scammers often announce fake ICOs, or initial coin offerings, as a way to steal substantial funds. Don't fall for these fake email and website offers. Take your time to look over all the details.
Unfortunately, there are many ways that some Internet users exploit unsecure computing systems to mine or steal cryptocurrency. Learn more about staying safe and protecting yourself in this emerging market before you start investing in cryptocurrency.
The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that we are not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. CA Mitesh and Associates is India's leading Cryptocurrency Taxation Firm which is committed to helping people navigate complex tax laws and banking regulations. Our main aim is to assist the individuals with applicable laws & regulations compliance and providing support at each & every level to make sure that they stay compliant and grow continuously. For any query, help or feedback you may get in touch here - Appointment with CA
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