FTC Warning: What To Know About Cryptocurrency and Scams

[MrD]

What is cryptocurrency?

Cryptocurrency is a type of digital currency that generally only exists electronically. There is no physical coin or bill unless you use a service that allows you to cash in cryptocurrency for a physical token. You usually exchange cryptocurrency with someone online, with your phone or computer, without using an intermediary like a bank. Bitcoin and Ether are well-known cryptocurrencies, but there are many different cryptocurrency brands, and new ones are continuously being created.

How is cryptocurrency different from U.S. Dollars?

There are important differences between cryptocurrency and traditional currency.

• Cryptocurrency accounts are not backed by a government. Cryptocurrency accounts are not insured by a government like U.S. dollars deposited into a bank account. If you store cryptocurrency with a third-party company, and the company goes out of business or is hacked, the government has no obligation to step in and help get your money back.
• Cryptocurrency values change constantly. The value of a cryptocurrency can vary rapidly, even changing by the hour. It depends on many factors, including supply and demand. An investment that’s worth thousands of dollars today might be worth only hundreds tomorrow. And, if the value goes down, there’s no guarantee it will go up again.

How To Avoid Cryptocurrency Scams

Scammers are always finding new ways to steal your money using cryptocurrency. One sure sign of a scam is anyone who says you have to pay by cryptocurrency. In fact, anyone who tells you to pay by wire transfer, gift card, or cryptocurrency is a scammer. Of course, if you pay, there’s almost no way to get that money back. Which is what the scammers are counting on. Here are some cryptocurrency scams to watch out for.

Investment and business opportunity scams

• Some companies promise that you can earn lots of money in a short time and achieve financial freedom.
• Some scammers tell you to pay in cryptocurrency for the right to recruit others into a program. If you do, they say, you’ll get recruitment rewards paid in cryptocurrency. The more cryptocurrency you pay, the more money they promise you’ll make. But these are all fake promises, and false guarantees.
• Some scammers start with unsolicited offers from supposed “investment managers.” These scammers say they can help you grow your money if you give them the cryptocurrency you’ve bought. But once you log in to the “investment account” they opened, you’ll find that you can’t withdraw your money unless you pay fees.
• Some scammers send unsolicited job offers to help recruit cryptocurrency investors, sell cryptocurrency, mine cryptocurrency, or help with converting cash to bitcoin.
• Some scammers list scam jobs on job websites. They’ll promise you a job (for a fee), but end up taking your money or personal information.

Look for claims like these to help you spot the companies and people to avoid:

• Scammers guarantee that you’ll make money. If they promise you’ll make a profit, that’s a scam. Even if there’s a celebrity endorsement or testimonials. (Those are easily faked.)
• Scammers promise big payouts with guaranteed returns. Nobody can guarantee a set return, say, double your money. Much less in a short time.
• Scammers promise free money. They’ll promise it in cash or cryptocurrency, but free money promises are always fake.
• Scammers make big claims without details or explanations. Smart business people want to understand how their investment works, and where their money is going. And good investment advisors want to share that information.

Before you invest, check it out. Research online for the name of the company and the cryptocurrency name, plus words like “review,” “scam,” or “complaint.” See what others are saying. And read more about other common investment scams.

Blackmail emails

Scammers will often send emails that say they have embarrassing or compromising photos, videos, or personal information about you. Then, they threaten to make it public unless you pay them in cryptocurrency. Don’t do it. This is blackmail and a criminal extortion attempt. Report it to the FBI immediately.

Social media scams

If you read a tweet, text, email, or get a message on social media that tells you to send cryptocurrency, it’s a scam. That’s true even if the message came from someone you know, or was posted by a celebrity you follow. Their social media accounts might have been hacked. Report the scam immediately to the social media platform, and then tell the FTC at ReportFraud.ftc.gov.

How To Report Cryptocurrency Scams

• Report fraud and other suspicious activity involving cryptocurrency to
• the FTC at ReportFraud.ftc.gov
• the Commodity Futures Trading Commission (CFTC) at CFTC.gov/complaint
• the U.S. Securities and Exchange Commission (SEC) at sec.gov/tcr
• the cryptocurrency exchange company you used to send the money

Source: https://consumer.ftc.gov/articles/what-know-about-cryptocurrency-scams

[kriptopoulin]

You're doing great work. Thanks for sharing with the community.

[jimbsr]

A lot of details 👍

[Kennysplash]

You can avoid a lot of scams if you are not greedy. It is the quest to make more money in just little time that makes many fall for such scams. 

[SWP890]

I was scammed after investing in an online site. The company was involved in some shady activity which caused me to lose money. I tried to retrieve my funds from them, but they refused to help me. Fortunately, I found another website that assisted me in recovering my money. I just want to warn everyone to exercise caution when dealing with any online investment company.