Top Crypto Scams in 2024 – Forbes Advisor INDIA

Cryptocurrency scams keep reinventing themselves, deceiving millions of investors. The fraudsters convince investors with their witty words and persuasive tone of voice. This often works effectively. Once they cheat a few investors, they repeat the same process but under a different name.

Crypto scams are generally like any other scam, except the scammers are after your crypto assets rather than your cash. Their goal is to manipulate investors into divulging personal information or transferring digital assets to the scammer’s account.

During a panel discussion organized by IIM-Kozhikode, P Vasudevan, an executive director at the Reserve Bank of India said that cryptocurrencies cannot be referred to as “currencies” as they have no underlying value. The RBI has been critical of new-age currencies like bitcoins, stating that they pose a systemic risk to the financial systems.

Biggest Crypto Scam in India

The GainBitcoin Ponzi Scheme Scam

The GainBitcoin Ponzi scheme scam happened in the year 2018. Businessman Amit Bhardwaj defrauded 8,000 plus individuals to the tune of INR 2,000 crore in total. He designed a multi-level marketing scam, manipulating and enticing investors to exchange Bitcoins at promised high returns. He introduced an 18-month contract guaranteeing them a 10 percent return.[4]

The Morris coin scam

The Morris coin scam surfaced in the year 2022. This was also the latest fraud in the crypto scams in India. Allegedly, more than 900 investors fell victim to a website promoting a fake crypto named Morris coin. The victims participated in the initial offering of the fraudulent cryptocurrency. The scam amounted to R1 200 cr. [4]

The Karnataka Bitcoin Scandal

The Karnataka Bitcoin scandal took place in the year 2021. The scandal saw the Central Crime Branch, the specialized investigation unit of the Karnataka Police, seize 31 Bitcoins worth INR 9 cr from a Bangalore-based hacker in November 2021. [4]

STA Token

STA Token, a company that defrauded over 20,000 individuals and collected INR 1,000 cr through alleged crypto investments. It was revealed by the state crime branch as a nationwide cryptocurrency scam. STA token company has been accused of engaging in unauthorized money circulation and illegal multi-level marketing without Reserve Bank of India approval. Gurtej Singh Sidhu and Nirod Das, the two managers of the company, were arrested for planning the Ponzi scheme and the Economic Offenses Wing (EOW) seized their accounts, which contained shady cash deposits of over INR 15 cr contained. [5]

Common cryptocurrency scams to watch out for in 2024

Bitcoin Investment Schemes

In this scheme, the fraudsters reach out to investors under the guise of experienced investment managers. These individuals claim to have amassed millions through crypto investments that assure them lucrative returns. [3]

Phishing scams

Phishing scams are not new, but still remain common. Scammers distribute emails that contain malicious links to fake websites and collect personal information, including crypto wallet key data. Unlike passwords, users only get one unique private key for their digital wallets. However, if this key is stolen, it poses challenges to rectify the situation. Each key is exclusive; therefore, replacing it requires creating a new wallet. [3]

Pump and shower schemes

Pump and dump scheme involves scammers artificially inflating the cryptocurrency price by coordinating purchases and positively promoting them. They then quickly sell their holdings, causing the price to drop and leaving unsuspecting investors with worthless tokens. [2]

Back pulling scams

Kickback scams involve investment fraudsters artificially inflating the coin to attract funding, value of a new project or non-fungible token (NFT). Once they secure the funds, they disappear with the capital. The coding embedded in these investments prohibits investors from selling the bitcoin after purchase, thus rendering their investment useless. [3]

Fake initial coins

Fake ICOs lure investors with the prospect of lucrative returns on a purportedly groundbreaking new cryptocurrency venture. Even so, the project often appears to be non-existent, resulting in the funds raised disappearing. [2]

AI scams

As artificial intelligence (AI) becomes increasingly common, criminals are discovering new methods to exploit the cryptocurrency market. Using AI chatbots, attackers can communicate with users, endorse fraudulent signs and provide guidance. These chatbots are programmed to inform investors of slick profitable investment prospects, which often evolve into pump-and-dump schemes aimed at artificially inflating token values ​​before a sale is implemented. [3]

How to Identify Cryptocurrency Scams?

Carefully manage your crypto wallet keys: Every cryptocurrency wallet is equipped with a distinct key for access. It is crucial to protect the wallet key information, to ensure that full control over access to it is maintained. [6]

Use your wallet wisely: When dealing with significant amounts of cryptocurrency, take extra precautions to protect your assets. Implement robust security protocols such as two-factor authentication, consider obtaining insurance coverage against potential scams, and store a significant portion of your holdings in cold wallets. [6]

Secure your wallet: When engaging in crypto investing, make sure you own a wallet with private keys. If a company asks you for your investment participation keys, it’s probably a scam. Keep your wallet keys confidential. [7]

Monitor your wallet app closely: When starting money transfers, start with a very small amount to verify the authenticity of a cryptocurrency wallet app. If you encounter any suspicious activity while updating your wallet app, abort the update and uninstall the app. [7]

Invest only in understandable companies: If you do not have enough clarity about how a particular cryptocurrency functions, stop and do thorough research before deciding on cryptocurrency investment. [7]

Be careful with social media advertising: Crypto fraudsters frequently use social media to promote fraudulent schemes. Exercise skepticism when you come across cryptocurrency opportunities on social media platforms and do your due diligence. [7]

Do thorough research: Established cryptos are generally legitimate, but for lesser-known ones, dig into research. Find white papers, authentic reviews and testimonials and explore the team behind the cryptocurrency. Consult a trusted fake list of cryptos for fraud pulverization. [7]

Assess Feasibility: Companies that promise investors guaranteed returns or instant wealth are likely scams. Approach opportunities with caution if they seem too good to be true. [7]

How to report crypto scams in India?

Let’s take a look at some common steps to report crypto scams in India:

Step 1: File a complaint with your local police (provide full comprehensive details and evidence).

Step 2: Reach out to the nearest cybercrime cell (as they deal with online fraud, including cryptocurrency fraud).

Step 3: Report the cryptocurrency scam to regulatory bodies such as the Reserve Bank of India or the Securities and Exchange Board of India.

Step 4: Make use of the National Cyber ​​​​Crime Reporting Portal (NCRP). You can register your cyber crimes complaint on their portal.

Step 5: Inform Consumer Protection Agencies about the scam as they can guide you on steps or investigations.

Remember to provide as much information as possible, including communication records, transaction details and any other supporting evidence. Be wary of potential scams and verify the authenticity of crypto investments before engaging in them.

How to avoid crypto scams

Given the increased risks with digital assets, it is imperative to be careful to avoid becoming a crypto fraud. You should follow these tips to avoid crypto scams:

Do not respond to unsolicited contact. Be aware that it is best practice not to respond to any of the calls or messages, regardless of who contacts you from any financial institution or even your crypto broker. You can personally check the official website of the institute and contact them independently through the official number. Check before you click. You should not click on any attachments or hyperlinks sent from unknown contacts. Keep accounts separate. Do not permanently link your cryptocurrency brokerage accounts to your traditional bank accounts. Place a hold immediately. If any unusual activity occurs on your account, don’t wait, just put a hold on your future transactions because prevention is better than cure. Use reputable companies. To ensure your crypto security and personal safety use a wallet from a reliable company, Exodus and MetaMask are reliable hot wallets or Ledger, Trezor or Bitbox are reliable cold wallets, you can consider. Look for HTTPS. A URL must have HTTPS, as opposed to just HTTP, for cryptocurrency exchange or wallet indicating that the site has secured and encrypted traffic.

By carefully evaluating the type and severity of the scam, victims can develop a clear understanding of the initiation of required actions and potential recovery prospects.

Source:

Statistics Times of India TechTarget CNBC TV 18 The Economic Times ZebPay Kaspersky