Introduction to Crypto Scams
Cryptocurrencies, or ‘crypto’, are digital forms of money that use encryption to secure transactions and control the creation of new units. Crypto is a very high-risk and volatile investment, as the value can go up or down quickly and there are no guaranteed returns. Crypto can also be used to pay for goods and services online, but it is not legal tender in most countries.
Unfortunately, crypto also attracts scammers who want to take advantage of unsuspecting investors or consumers. Crypto scams are schemes that use crypto to defraud people of their money or personal information. Crypto scams can take many forms, such as fake trading platforms, fake crypto products, fake crypto jobs, or requests to pay in crypto for various reasons.
Below, we will explain some of the common types of crypto scams in Australia, how to spot them, and how to avoid them.
Types of Crypto Scams in Australia
According to the Australian consumer watchdog, crypto scams have increased by 172 percent between January and November 2023, totalling $109 million. The Australian Federal Police say crypto scams have ‘exploded’ during the pandemic, as criminals exploit the crisis and target people working from home.
Crypto Scams Example
Fake trading platforms or fake crypto wallets
These are websites or apps that mimic real online exchanges or wallets, but they are designed to steal your crypto or personal information. They may use phishing web pages, fake investment opportunities, fake customer support, or fake tokens to lure you in and lock you out of your account.
Fake crypto products or jobs
These are offers that promise high returns or free money for investing in a new or unknown crypto project, token, or service. They may use fake celebrity endorsements, online influencers, online forums, or family and friends to promote their scheme. They may also ask you to pay a fee or tax to access your funds or withdraw your earnings.
Requests to pay in crypto
These are requests from scammers who pretend to be someone else, such as a romantic partner, a government agency, a charity, a business, or a friend in need. They may ask you to pay crypto for various reasons, such as taxes, fees, fines, donations, goods, services, or emergencies. They may also ask you to move your crypto to another exchange or wallet for security reasons.
Some of the common types of crypto scams in Australia are:
Here is an example of a crypto scam that happened in Queensland:
John and Eve were a couple who wanted to buy their own home. They had saved more than $110,000 for a deposit. John had been investing in stocks and started looking for other options to increase his savings. One day he received an unsolicited phone call from someone posing as an investment manager from Irish brokerage Druid ICAV. They offered John shares in Airbnb and used their own fake website and investment platform to convince him. John invested $30,000 in the scheme.
Later, the scammers contacted John again and told him about a new opportunity to invest in a major cryptocurrency exchange. They said he could make huge profits by buying their tokens before they went public. John invested another $80,000 in the scheme.
The scammers then asked John to transfer his crypto to another exchange for security reasons. John followed their instructions and moved his crypto to their fake exchange. That’s when he realised he had been scammed. The scammers had locked him out of his account and disappeared with his money.
John and Eve lost their entire savings and their dream of buying a home.
How to Avoid Crypto Scams
Crypto scams can be hard to detect and prevent, as they use sophisticated techniques and technologies to deceive people. However, there are some steps you can take to reduce the risk of falling victim to a crypto scam:
Do your research
Before investing in any crypto project, token, service, exchange, or wallet, do your research and verify its legitimacy. Check the official website address, contact details, registration details, reviews, ratings, social media accounts, White Paper (a document that describes the project), and online forums. Be wary of unsolicited offers or recommendations from strangers or acquaintances.
Don't trust anyone
Don’t trust anyone who asks you to pay in crypto for any reason. Don’t trust anyone who promises high returns or free money for investing in crypto. Don’t trust anyone who asks you to move your crypto to another exchange or wallet for security reasons. Don’t trust anyone who claims to be an official customer support agent or an investment manager without verifying their identity.
Don't act on impulse
Don’t let emotions or pressure influence your decisions. Don’t invest more than you can afford to lose. Don’t invest in something you don’t understand. Don’t invest without doing your research. Don’t invest without reading the terms and conditions.
Secure your devices
Use a strong password and enable two-factor authentication for your online accounts, especially your crypto exchange or wallet. Use a reputable antivirus software and update it regularly. Don’t click on suspicious links or download unknown attachments. Don’t use public Wi-Fi or devices to access your crypto accounts.
Report and recover
If you think you have been scammed or have seen a scam, report it to the authorities and seek help. You can contact the Australian Cyber Security Centre, the Australian Competition and Consumer Commission, or the Australian Federal Police. You can also contact your bank or credit card provider to try to reverse the transaction. However, be aware that recovering your money from a crypto scam can be a lengthy and complicated process that may require professional assistance to be successful.
Cryptocurrency scams, utilising crypto to exploit individuals for money or personal information, take various forms like fake trading platforms, deceptive crypto products, sham job opportunities, or demands for payment in cryptocurrency. The prevalence of crypto scams in Australia has surged, particularly amid the pandemic, emphasising the need for increased awareness and caution. To shield against these scams, individuals must conduct thorough research, exercise skepticism, resist impulsive actions, secure electronic devices, and promptly report and seek recovery.
The escalation of cryptocurrency scams in Australia, notably during the pandemic, underscores the critical need for heightened awareness and caution. The diverse range of scams, encompassing fake trading platforms, deceptive job offers, and requests for crypto payments, poses significant risks to unsuspecting individuals. The unfortunate experience of John and Eve, who lost their entire savings, serves as a poignant reminder of the severe financial consequences associated with falling prey to these scams. Safeguarding against crypto scams necessitates comprehensive research, skepticism toward unsolicited offers, and the implementation of robust security measures for online accounts. Exercising emotional restraint, practicing due diligence, and promptly reporting suspected scams to relevant authorities are vital steps in mitigating the risks posed by the increasingly sophisticated tactics employed by crypto scammers. While recovering from such scams is challenging, proactive measures contribute to creating a safer environment for investors and users navigating the dynamic crypto landscape.
Advanced Digital Forensics
If you’re a victim of identity theft, cyber crime, or another scam, contact us today to learn about the tools and resources available to assist in resolving your claim.
