Don’t talk finance with strangers.
Don’t give personal or banking information online or on the phone.
Do some research before investing.
It all seems like such obvious advice, and yet cryptocurrency scams are multiplying all over the world — defrauding people out of billions of dollars.
Some of the scams are highly sophisticated and some seem laughably amateurish, but most of them manage to fleece people.
Organized crime is involved in crypto scams. It is very difficult to stop these scams, to find the people involved, or to prosecute anyone.
Even the government of Canada website includes a page devoted to helping people avoid investment scams. Its list of red flags includes being contacted by someone you don’t know, the promise of high returns at no risk and the request to act fast in a “once in a lifetime” opportunity, among others.
Every adviser offers the same adage: If something seems too good to be true, it usually is.
But nothing clouds one’s judgement like greed.
(Lust may also play a role. Educator Irwin Diamond describes a whole other lonely hearts element in scamming, whereby a beautiful young woman contacts you “by mistake” via WhatsApp, then continues the conversation anyway. Sooner or later, she suggests you invest in crypto with her, and then the game is afoot. As Irwin said, “Greed overrides intelligence.” And then people lose their life savings.)
It’s not just the crypto uninitiated who get fleeced.
OcryptoCanada is a website created by Vancouver resident Oleg Galeev, 30, specifically to guide Canadians interested in the cryptocurrency market.
“There are not many sources out there for Canadians. Most of them are based on US laws and compliance,” said Galeev, who got into cryptocurrency several years ago.
“This is an educational website that helps Canadians understand crypto, how it works here, and what you need in order to trade crypto.”
Galeev offers straightforward advice on things such as which of the crypto exchanges are good and trustworthy.
For that list, “We carefully audited and reviewed more than 60 exchanges and rated them using several factors, including security and compliance with Canadian laws,” he said.
“There have been times when exchanges will pop up and users flock to it, handing over millions of dollars in trading activity, only for the exchange to close and the founders to run off with everyone’s money.”
Recently, OcryptoCanada published an article on how to avoid common online crypto scams.
Galeev lists a series of fraudulent approaches — fake emails from an apparently real crypto exchange, phishing attempts through text messages and other ways of inspiring someone to click a link that leads to trouble.
Other emails scams ask to have documents verified, “or make some type of common request that an exchange might feasibly make,” Galeev said. Here, the link will take you to a fake website where you’ll be asked to give personal information, “that will permit your cryptocurrency to be stolen.”
Then there are fake exchanges. How can you check?
“For Canadian exchanges, look for one that is registered with FINTRAC: The Financial Transactions and Reports Analysis Centre,” he said.
And watch out for celebrity endorsements, Galeev advised.
Some are completely fake, some are cover for pump and dump schemes, most are dubious.
Kim Kardashian and a few other celebs are being sued for social media posts or mentions of Ethereum Max, which has now lost almost all of its value.
There are scams that are psychology based and scams that are technology based or both, and innumerable ways to lose your money.
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Be vigilant about checking URLs and email addresses. Keep your crypto wallet secure. Never give your seed phrase to anyone.
And remember your mantra: when something seems too good to be true, it usually is.