Advancing the sphere of influence, scammers also try to impersonate famous celebrities, businessmen, or cryptocurrency influencers. To capture the attention of potential targets, many scammers promise to match or multiply the cryptocurrency sent to them in what is known as a sweepstakes scam. Well-crafted messages from what often seems like a valid social media account can often create a sense of validity and spark a sense of urgency. This mythical once-in-a-lifetime opportunity can lead people to transfer funds quickly in the hope of an instant return.
Another type of investment scam involves the use of fake celebrity endorsements. Scammers take real photos and impose them on fake accounts, advertisements, or items to make it look like the celebrity is promoting a large financial gain from the investment. The sources of these claims appear to be legitimate and use reputable company names, such as ABC or CBS, with a professional-looking website and logos. An easy way to scam novice blockchain enthusiasts is to get them to buy a type of freshly minted coin or token for a game.
If enough people drive up the price through supply and demand, this gives the original scammers the opportunity to sell all of their properties and disappear in a move known as a “carpet pull”. This is where scammers promise to match or multiply the cryptocurrency sent to them in what is known as a sweepstakes scam. Smart messaging from what often seems like a valid social media account can create a sense of legitimacy and spark a sense of urgency. This so-called “once in a lifetime” opportunity can lead people to transfer funds quickly in the hope of an instant return.
Victims of cryptocurrency scams can file complaints with agencies such as the SEC or the FTC or sue suspected cryptocurrency scammers. But lawsuits cost a lot of money, something that many victims don't have, and they can take years to resolve. Detecting violations in cryptospace could, in theory, be possible given that cryptotransactions are publicly quoted on blockchain transactions. This practice, known as a carpet attraction, has become especially prevalent as DeFi protocols have become popular with cryptocurrency investors interested in increasing returns by searching for crypto instruments that generate returns.
And while major cryptocurrency exchanges have better fraud security measures than lesser-known exchanges, there is still no guarantee for investors to recover stolen cryptocurrencies. Financial experts advise most passive investors to keep cryptocurrency holdings below 5% of their portfolios and never invest in cryptocurrencies at the expense of saving for emergencies or paying off high-interest debts. Also, don't forget to report fraud to any cryptocurrency exchange you used to complete the cryptocurrency transaction whenever you suspect or have proof that malicious actors are at stake.