The cryptocurrency industry is unfortunately full of scams and hackers looking to steal your hard-earned cryptocurrency.

A variety of tactics are used by hackers and their methods are being improved every day.

The most common strategies adopted by scammers are financial pyramid schemes, fake exchange platforms, fake web wallets…

We hope, through this article, like other articles of the Arab Bitcoin website, aimed at helping cryptocurrency users in the Arab world by explaining how hackers work and paying attention to the red flags to look for in every investment project, to be better prepared to fend off these fraudulent attacks and successfully protect your currencies.

1- Fraudulent Ponzi schemes

Deceptive Ponzi schemes rely on fraudulent investment management services.

Read:Cryptocurrency trading platform obtains UAE license

Investors usually contribute money to a portfolio manager who promises them a high return.

Then, when these investors want their money back, it is repaid with the incoming money contributed by subsequent investors.

The person responsible for organizing this type of fraud is responsible for controlling the entire process.

Its mechanism of action is to transfer funds from one client to another and to abandon any real investment activities.

One of the biggest Ponzi schemes in the crypto market that is contributing to selling pressure on Bitcoin is the “Plus Token” scam.

The Plus Token project was a cryptocurrency Ponzi scheme disguised as a high-return investment program.

Officials shut down the fraudulent project in June 2019 after withdrawing more than $3 billion in stolen cryptocurrencies such as Bitcoin, Ethereum and EOS.

In a report issued by Chainalysis, a US-based blockchain analysis firm, Plus Token was “one of the largest Ponzi schemes ever” and was likely responsible for the decline in the price of Bitcoin in 2019.

The report claims that there are still at least 20,000 Bitcoin and 790,000 Ethereum missing that could be dumped into the market at any time.

Read:Hong Kong and Thailand are studying the project to launch a digital currency in the next quarter

2- Financial pyramid schemes

The financial pyramid scheme is structured such that the initial scheme has to appoint other investors who will continue to recruit other investors, these investors will then continue to recruit additional investors, and so on.

There will be an incentive presented as an investment opportunity, such as the right to sell a particular product or high profits for each recruit.

Each investor pays the person he recruited and so on.

The recipient must share the proceeds with those at the higher levels of the pyramid structure.

The main difference is that pyramid schemes are more difficult to prove compared to Ponzi schemes.

They are also better protected because the legal distinctions behind corporations are much stronger than those that protect individuals.

In Brazil recently, a group called “Bitcoin Banco” (Bitcoin Bank) allegedly conducted a $1 million scam.

The group was responsible for a lot of exchanges in the country and promised specific returns to investors who would trade the exchange’s currency, “Negociecoins”.

According to analysts, this profit did not exist because the company needed investors’ money to produce the order book orders.

Read:MicroStrategy plans to buy more bitcoin by offering $1 billion in stock

3- fake wallets

One of the most common mistakes made by novice cryptocurrency users is to fall prey to web and hardware cryptocurrency wallets.

Since some users trust Google and other search engines to search for websites, it is very easy to click on the wrong website.

To avoid making this mistake, always check the website you are accessing.

There are a lot of fake URLs and GitHub repositories with the sole purpose of stealing your precious cryptocurrency.

A simple solution is to save the websites you visit often, such as web wallets and exchange platforms, in your browser’s Favorites list.

In this way, it will be almost impossible to fall prey to fake URL spoofing.

in the last

Before making any decisions about trading your cryptocurrency or investing in a new currency, make sure you complete your thorough research.

Stay tuned for the latest news and trends as scam reports start to rise.

Most of all, don’t forget to apply daily digital best practices to your activities, update your device, and raise awareness of scams to avoid them.

Scams will continue to develop in the cryptocurrency market, so you must also develop your security skills and techniques to protect your property.

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