The increase in scams using cryptocurrencies goes hand in hand with their value on the market. A cryptocurrency is an electronic currency that operates outside the control of governments and central banks, such as the Central Bank of Brazil. Owners keep cryptocurrencies, such as Bitcoin, in electronic wallets, protected by passwords and encryption.

According to Code Market Cap, a price tracking website, the global cryptocurrency market value currently stands at US$ 2 trillion, with Bitcoin leading the sector, followed by Ethereum. However, there are currently more than 8,000 cryptocurrencies which together open the door to many cyber attacks.

In fact, due to the growth and overvaluation of cryptocurrencies, cryptocurrency fraud has taken a huge leap in recent years. The Federal Trade Commission (FTC) received almost 6,800 complaints of cryptocurrency investment scams from October 2020 to March 2021, compared to 570 in the same period the previous year. Reported losses grew more than tenfold to over $80 million.

In addition, the 2021 Crypto Crimes report by blockchain analysis firm Chain Analysis shows that the total value of cryptocurrencies held at illicit wallet addresses increased by 79% during 2021, reaching $14 billion.

Illicit wallet addresses in the Chainalysis report refer to the wallets where scammers deposit the money they have stolen by executing Crypto Scams strategies.

Despite the innovation and high technology of all cryptocurrencies, many of the related scams are just modern versions of classic frauds

Generally speaking, Cryptocurrency Scams, or simply Crypto Scams, are cybercrimes aimed at gaining access to a digital wallet or authentication credentials to access cryptocurrencies.

In other words, this means that cybercriminals are trying to obtain information that gives them access to a digital wallet or other types of private information, such as security codes. In some cases, this even includes access to physical hardware.

In practice, Crypto Scams seek to transfer cryptocurrency directly to a cybercriminal due to identity forgery, fraudulent investment or other business opportunities by malicious means.

You can transfer cryptocurrencies between wallets anonymously to buy a pizza, sell a car or even pay a ransom, as long as the other party to the transaction accepts cryptocurrencies.

With a currency that you can't touch, it is a medium that meets the requirements of cybercrime, jeopardizing financial operations and especially the basic concept of cryptocurrencies, security.

The types of scams that cryptocurrency investors, companies and users face can be many, from illicit get-rich-quick schemes that will actually cause you to lose money, to ransom payments for data hijacking, the result of ransomware attacks.

Encryption is not always secure

As new as cryptography is to the world, one of the most common forms of scam is almost as old as the Internet itself. Although a crypto transaction is indeed secure, there is nothing to stop a scammer from creating a fake website that forces the user to send cryptocurrency or even their own money to a cybercriminal, basic phishing.

The attacker can lead you to fake websites via a malicious email or through social media posts, text messages and many other channels. These sites usually market some attractive scheme around cryptocurrencies or NTFs, designed to convince you to spend money. The transaction also looks legitimate, but will actually send money to criminals.

To identify and avoid these scams, you should avoid downloading any documents from unknown emails, messages or websites. You should also check that web pages that accept payments are https certified.

Social engineering scams and love scams

As mentioned earlier, crypto scams look a lot like regular Internet scams. So it's no surprise that love crimes, or romance crimes as they are also known, and social engineering are commonplace in this world.

Romance scams are scams in which a criminal uses a fake account to lure victims with the prospect of a romantic relationship. They are usually carried out via dating apps and matrimonial websites, where people are quick to trust others due to the nature of the app/website.

Once they have won the trust of the victims, they ask for money and disappear with the proceeds of the scam.

The strategy has worked and has claimed many victims. According to the FBI, in the US city of San Francisco alone, more than US$64 million was stolen in love scams, compared to just over US$35 million in 2020.

Fake cryptocurrency investment schemes

Many cryptocurrency investors are cheated out of large sums of money when they are tricked into investing in a fake cryptocurrency.

In practice, investors are told that the currency has been created using blockchain technologies and is being traded for large sums of money, which in turn would increase their returns. However, after each successful transaction, investors discover that the currency does not exist and is not traded on any exchange.

Learn how to invest safely in cryptocurrencies and avoid crypto scams:

• Promises of large guaranteed returns or claims that your cryptocurrency will multiply are always scams.
• The cryptocurrency itself is the investment. You make money if you're lucky enough to sell it for more than you paid for it. Don't trust people who say they know a better way.
• If an interested party, which includes "love contacts", organization or anyone else insists on some kind of business using cryptocurrency, you can bet it's a scam.

Anyone betting on the digital currency market needs to be aware of a number of details that are specific to this segment. For example, you need to be careful with online interactions: check the reliability of websites and apps, fraudulent emails and always be wary of offers that offer high financial returns through investments or cryptocurrency mining. Always do business with trustworthy companies.