Some of the oldest tried-and-true scams have found new life in the wild, wild west of cryptocurrency trading. Many Americans who had never heard of cryptocurrency, much less Dogecoin and other obscure digital tokens, have now received a crash course simply by watching the news the past few months.
The value of the U.S. cryptocurrency market has been steadily growing for years. Where money goes, though, scammers are soon to follow. Cryptocurrency scammers are even better positioned than other, more conventional scammers due to loose or nonexistent government oversight. Unfortunately, this means crypto scammers typically ride off into the sunset with no criminal charges and a devastating trail of consumer fraud.
A few types of cryptocurrency scams you should know about are:
- Pump-and-dump schemes. This type of scam received media attention earlier in 2021 with the fiasco over GameStop and AMC stocks. Individuals on Reddit and other social media sites “pumped” up stocks for these companies, causing a buying frenzy. At a certain point, buyers who were in-the-know sold off their shares at a huge gain while others who simply rode the wave were left high and dry. The same thing can happen with digital currency. Bad actors can hype up a new cryptocurrency, mining operation, or trading outpost. Once the audience starts buying in, the fraudsters cash out and disappear.
- Fake websites. This is usually as simple as setting up a hastily built website for a seemingly legitimate cryptocurrency exchange. Or, the website could try to pass off as the official site for Bitcoin, Dogecoin, or other established cryptocurrencies.
- Soliciting investments for non-existent products. This is another prime example of a timeless scam in search of a vessel. While browsing social media, you might read about “exciting new opportunities” to become an early investor in cryptocurrencies or related crypto-infrastructure. For an upfront fee, you’ll receive discounts on digital money when the operation gets off the ground. Soon after handing over real money in this hypothetical scenario, the company vanishes with your money.
Ways to Avoid Cryptocurrency Scams
It would be easy to say, “Don’t put money down for a deal that seems too good to be true.” That’s good general advice. However, recognizing a cryptocurrency scam means staying vigilant against these conditions:
- Offers to pay you after you download an app from outside legitimate application marketplaces;
- Offers sent to you from strangers over social media;
- Abrupt hyping-up of cryptocurrencies you’ve never heard of; and
- Celebrity endorsements of previously unheard-of cryptocurrencies.
The dearth of regulations and laws surrounding cryptocurrency scams is no reason not to contact a consumer protection attorney if you’ve been victimized by one. A consumer protection law firm with skilled legal professionals can evaluate your situation and recommend next steps. Bell Law is committed to protecting consumer rights and holding scammers accountable. Let’s talk about your situation over a free consultation.