Safer and Better Trading: Tips to Spot Crypto Scams

BlockchainBeginner

2024-09-13

Scams are emerging as a persistent challenge in crypto space as hackers lurk in the shadows. Backed by advanced technology and tools, these scams have become increasingly sophisticated to identify.

So, how can you safeguard your assets and shield yourself from potential threats? Let's explore the various types of scams with Toobit and learn how to discover them before it gets too late.

The status quo in 2024

Scams remain an ever-present threat to crypto in 2024 as established tactics find their way into the sector and criminals think up new ways to use decentralized technology and digital assets to target their victims. Data has shown, however, that last year brought a significant decrease in the total value of funds lost to scams and hacks.

According to on-chain data, total crypto losses reached nearly 2 billion in 2023, down from the previous year. Although these improved figures are partly due to increased security measures, 2022's total was inflated by the major collapse of entities like FTX and Terra. So what kind of crypto scams are out there?

Remittance scams

These types of scams follow a simple premise. The victim is contacted by a supposedly legitimate investment firm asking them to invest a small amount of crypto to eventually unlock a much larger quantity in return. The scammer may then ask for further payment to cover supposed taxes or fees — all part of the administrative process. However, the returns never arrive, and the scammer disappears. This scam relies on fear of missing out (FOMO) on a lucrative financial opportunity and pressure tactics to convince victims to act quickly and without assessing the situation fully.

Phishing scams

Seed-phrase scams and fake websites: Like deceptive doppelgangers, some scammers create fake websites that mimic popular platforms or applications. Always double-check URLs before clicking on them, and never ever give a website your seed phrase.
Email and social media phishing: Beware of well-known figures like Elon Musk on Twitter, offering "too good to be true" deals. If it smells fishy, it probably is. These scams often appear in your mentions, social or Discord DMs, email inboxes, and comment sections. Remember: never give out any personal information or passwords and seed phrases.
Fraudulent mobile Apps: Scammers can disguise themselves as popular wallet Apps, waiting to snatch your hard-earned crypto. Always download Apps from official sources and check reviews to make sure the app is legitimate. When restoring a crypto wallet, you'll have to input your seed phrase, so be sure to double-check whenever you download a new App like Toobit.

Exchange and wallet scams

Fraudulent exchanges: Unscrupulous individuals might set up fake exchanges to lure users. Stick to well-known, reputable exchanges that transparently showcase their reserves, such as Toobit, to protect your assets.
Fake wallet Apps and services: MyBigCoin is one example of a fake service with empty promises designed to steal user funds. Always research wallet providers and look for trustworthy recommendations.
Initial Coin Offering (ICO) and IEO scams: ICOs and IEOs can be an exciting and rewarding opportunity, as with any new project in crypto, but they also carry big risks. Be mindful of the pitfalls associated with them and make sure you do your due diligence on what these ICOs are promising. Look for transparent information about the team, realistic goals, and a well-written white paper.

Best practice to avoid getting scammed

So how can we add an extra layer of security to our crypto assets?

Secure or self-custody your digital assets

Use reputable wallets and exchanges: Trustlessness is crucial in the crypto world. Stick to well-established exchanges with strong security measures in place that transparently communicate their Proof of Reserves or open-source their security models.
Enable two-factor authentication: Add an extra layer of security to your accounts by enabling two-factor authentication (2FA). It's a small step that can make a massive difference.

Research projects thoroughly

Check team credentials and project history: Investigate the background of the project's team members and their past accomplishments. A solid team is the backbone of any successful project.
Analyze tokenomics and use cases: Dive deep into the project's tokenomics and use case. A strong project should have a practical purpose and a clear plan for token distribution. If a token distribution is extremely concentrated among founding members or doesn't have a clear lockup plan, this may be a sign of a pump-and-dump scheme.

Monitor your assets constantly

Keep track of your assets: Regularly review your portfolio and stay informed about the projects you're involved in.
Stay informed about the crypto market: The crypto landscape evolves rapidly. Keep yourself updated on the latest news and developments to make informed decisions. We recommend following reputable news sources and leading social media accounts like Toobit official X in the crypto space.

Final words

Always keep these tips in mind to trade better and safer:

Know the red flags: Learn about common scams and warning signs that come with phishing attempts and other fraudulent activities.
Strengthen your defenses: Practice good cybersecurity habits and keep important information — such as your crypto wallet seed phrase — as secure as possible.
Do your analysis: Always do your own research before trading new crypto tokens, NFTs, or other digital assets.