Cryptocurrency, also known as Crypto, is a digital currency that can be exchanged online for goods and services. Although intangible, crypto has exploded in popularity in the past few years and continues to grow. We know that when a topic or product gains enough popularity scammers are not far behind.
Phone apps have created an opportunity for anyone to become an investor in these cryptocurrencies and a huge influx of investments have come from young adults and teens. This easy access to early investing can be great, but without the proper guidance young investors face some serious threats. Scams are emerging and many are using social media platforms to target young and vulnerable investors.
Here are some common cryptocurrency investments scams that we should all be aware of:
The Crypto Ponzi Scheme
The classic Ponzi scheme gets a new twist with a digital investing trend. Scammers have been known to recruit investors under them with promises of big paydays. They generally target young and inexperienced investors with flashy websites, testimonials, and alluring statistics. But these are generally a ruse to bring in investors. The schemers generally push for more investments from their followers and make it very difficult to withdraw any of their supposed profits.
The Crypto Multiplier
This popular scam commonly appears on social media sites and involves a promise of multiplying any cryptocurrency provided. To lure in their victims, scammers have been known to impersonate celebrities, influencers, or popular investors. Once the crypto is sent, it is typically never returned.
Cryptocurrency can be considered an extremely volatile investment. Warn your teens and young adults about the potential pitfalls of investing in crypto and inform them that it should not be treated like a get-rich-quick plan.
For those that do use these investing tools or digital wallets, watch for phishing scams targeting access to your accounts. Set up very strong passwords for these accounts and enable two-factor authentication if available.
If you or a loved one has fallen victim to a cryptocurrency investment scam, you can and should report it to your local consumer protection agency.