Behind the Blockchain: Exploring the Surge in Cryptocurrency Scams

Techy bullion
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Cryptocurrency Scams

In recent years, the world of cryptocurrency has gotten attention and exceptional growth with Bitcoin and other digital assets. But this surge has brought unusual scams and bought its dark side out. Potential imposters target newcomers and seasoned investors in this industry and create illegal transactions, which lead to monetary losses. The rapid increase in cryptocurrency scams contributes to several factors. The decentralized and cryptic nature of blockchain technology underpins the cryptocurrency and makes it difficult to recover funds lost due to scams. Moreover, the hype surrounding cryptocurrency has created a fertile ground for scammers to exploit investors for missing out. 


Let’s dive deep into the case studies of crypto scams, the major causes of surged blockchain frauds, and how to combat them precisely.

Cryptocurrency Scams | High-Profile Case Studies

  • From 2020 to 2022, there has been a big rise in how much money senior citizens in the U.S. lose to cryptocurrency scams. In the most recent year studied, seniors lost over a billion dollars to these scams. Cryptocurrency payments are hard to trace, which is why many cybercrimes use this payment method.

  • In 2022, there were a lot more cryptocurrency hacks and thefts, especially involving Terra Classic and FTX. The amount of money lost in these hacks was about five times more than in 2021. In 2022, there were many significant incidents that affected the whole cryptocurrency market. The fall of stablecoin UST caused losses in other cryptocurrencies, and many crypto exchanges were affected by the fall of FTX at the end of the year.

  • Over the past five years, cryptocurrency scams have caused investors to lose more than $20 billion. In 2021, a new type of scam called "rug pulls" accounted for about a third of the $7.7 billion lost that year. Rug pulls happen when cryptocurrency creators take investors' money and then disappear without a trace. 

Exploring the Root Causes of Rising Crypto Fraud Cases

As the world has moved towards digital systems and blockchain technology is growing, users are getting familiar with it and trying to fool potential investors.

Extortion and Blackmail Scam

According to a report by the Federal Trade Commission (FTC), imposters claim to have users’ humiliating personal credentials, including photos and videos, just to trap them. These intimidators blackmail potential individuals to expose them until they provide their cryptocurrency or private keys. These extortion attempts by fraudsters should be reported to the enforcement department, such as the Federal Board of Investigation (FBI), for further scrutiny. 

Offering Business and Investment Opportunities

Cryptocurrency scammers propose exciting business and investment opportunities to their target audience. They set up the system in such a way that offers guaranteed returns after investing a substantial amount of money. Similarly, business opportunities are also offered by the imposters which lead to huge monetary losses to the individuals who directly deal in cryptocurrency. These ensured prospects lead to “financial disaster” for the users. 

Fake Job Listings Scams

The illegal departments that carry out cryptocurrency scams post fake job offers in order to target prospective customers. The job listings include the tags of crypto mining and investors so they can hire relevant users in this field. The main requirement of this department is that the users have to make payment in crypto to get started on this job. These scammers ask for extra payments after making a fake deposit into the account. 

Phishing Scams

Phishing attacks are carried out by illegal companies that pretend to be legitimate to ask for personal credentials. A lot of crypto phishing scams want users to share personal crypto wallet keys, usually by sending an official email asking for login to the account. 

Cloud Mining

These faulty platforms advertise to their regular crypto customers and investors to invest money to secure continuous mining power and rewards. Sometimes, they do not own the mining power they own but also do not present the required rewards to the customers. Not all cloud mining platforms are scams but it is always advised to thoroughly research and investigate the platforms before investing the money to mitigate the risks of monetary losses. 

Mitigating Crypto Frauds with KYC Regulations

Preventing cryptocurrency theft is important for maintaining the integrity of the users and companies. Even individuals and small businesses can be targeted by scams. One way to protect against scams this is by using robust KYC (Know Your Customer) processes. KYC is a rule that financial institutions like banks follow to make sure they know who their customers are. It helps stop people from using fake identities or doing illicit activities with money. By using KYC, cryptocurrency platforms can check if users are legitimate or not. This makes it harder for scammers to steal money. So, using KYC is an advanced way to stay safe and secure in the world of cryptocurrency.

Final Verdict

In this digital era of fast-growing blockchain technology, imposters target potential investors who deposit digital assets. To understand these scamming activities, it is important for users and companies to comply with KYC and other related processes for secure digital transactions. By understanding these scams, investors can safeguard their money in online finance. 


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