Fraud on cryptocurrency market: how to protect yourself from hackers?
The popularity of cryptocurrency attracts scammers. They use various frauds: from attacks on cryptocurrency exchanges and hacking wallets to such schemes as digital pyramids. Let’s clarify what is cryptocurrency fraud and how to avoid it when dealing with digital money.
Types of cryptocurrency fraud
A common type of fraud on the cryptocurrency market is hacking attacks and hacking. Despite the fact that many people already know about the methods of hackers, scammers often continue to use them.
To deceive Android users, hackers download applications on Google Play Store on behalf of the cryptocurrency platforms. To run such applications, you have to enter your personal data: so that hackers get access to users’ accounts.
Despite the fact that the level of protection of the Android operating system is lower than that of the iPhone, hackers use a similar scheme for App Store as well.
Bots are created by hackers in many applications. They are often found in the instant messenger of the Slack application, a hub for creating collaborations and joint projects of companies. Bots generate notifications for cryptocurrency owners about the problems that have occurred. As soon as users go to the bot-suggested link and enter personal keys, hackers gain access to cryptocurrencies.
Phishing scheme is quite simple: first hackers create a website that is identical to that of a certain cryptocurrency platform. Differences are almost invisible: an extra letter in the name or different domain zone.
Users visit the clone of the website, taking it for the original, and enter personal information for authorization. A fake resource saves information, and then redirects users to a real platform. Users re-enter their personal accounts and continue to work on the original website, while their account data has already been received by hackers.
Cryptocurrency fraud: digital pyramid
Such form of fraud as cryptocurrency pyramid is quite common: a company promises investors large profit in a short time and with low capital investment.
First investors attract new ones, and receive dividends from their funds. Thus, the amount is growing, and a lack of new investors results in the pyramid collapse.
To recognize the cryptocurrency pyramid is possible by analyzing the product development team. Usually, if it is a pyramid, the number of marketers prevails over the number of developers, since the company’s advertising plays an important role.
It is necessary to pay attention to the availability of licenses, financial reports, as well as any information about the company or its owners: pyramids don’t provide transparent access to such documents.
Moreover, organizers of such a business give an absolute guarantee that investors won’t lose their capital, but receive high interest – it is another reason to be wary of a company’s offers.
Real cases of fraud
One of the most striking examples of fraud is fake mobile application of crypto exchange Poloniex. In 2017 it became known that Google Play has two applications that provide services to the exchange, but the company representatives warned that there is no official platform for Android.
The applications on behalf of the exchange turned out to be fraudulent, but they were downloaded by inexperienced users 5.5 thousand times.
PlexCoin is a cryptocurrency, which offered investors 1354% profit in less than 29 days. Despite the traditional method of fraud, ICO collected more than $15 million. In December 2017, the Securities and Exchange Commission (SEC) announced that the project was fraudulent, frozen assets and arrested the founder.
Methods of protection
In order not to become a victim of cryptocurrency scammers, it is necessary to carefully monitor your investments and check any money transactions. To protect yourself from hacker attacks and hacking, it is recommended:
- to use two-factor authentication in applications;
- to check links to applications on official platform websites;
- to avoid using public Wi-Fi for cryptocurrency transactions;
- to check cryptocurrency websites for authenticity.
To avoid cryptocurrency pyramids, it is better to cooperate with well-known companies and carefully check those that started their operation recently.
There are also active methods for combating fraud in the digital money industry. On August 20, founders of the Gemini crypto exchange, the Winklevoss brothers, announced the creation of the Virtual Commodity Association (VCA). Its goal is to fight against cryptocurrency fraud.
The association includes such crypto exchanges as Bitstamp, bitFlyer USA and Bittrex. In September, they will start to develop new standards of operation that will help to increase the transparency of platforms.
Crypto experts will tell about cryptocurrencies and standards of their regulation at Blockchain & Bitcoin Conference Belarus. More information about the event and registration is available on the official website of the conference.