The time is ripe for another round of scams and shady schemes, as the coronavirus panic is used to extort potential Bitcoin buyers. Beware of scammy schemes or shady exchanges.
Scammers May Seek Naive Bitcoin Investors at Times of Panic
Scammers may be hunting for naive Bitcoin investors during times of panic. The latest Coronavirus precautions and lockdowns also mean dishonest crypto-related players may attempt to scam buyers into losing their money. The crypto space has never lacked scams and problematic exchanges. But with Bitcoin falling toward $5,000, new buyers may not be aware of the risks of trading. Exchanges crop up all the time, reporting extraordinary trading volumes. But those markets may turn out to be unreliable, potentially ending in an exit scam.
The best approach to avoid fake exchanges is to stick to the best-known names. Even leading exchanges have shown evidence of volumes way above organic demand. But at this point, any newly created and overhyped market may be even riskier.
So can we all agree that most of the big exchanges fake their volumes, thin order books crashing the price of #Bitcoin over 40%.
— Bilal Hammoud (@BYHAMMOUD) March 13, 2020
Buying BTC right now opens up a whole can of worms for newcomers. Usually, using a wallet is straightforward. But wallet scams are not rare. Users must be aware to avoid downloading wallets from links sent through chat or emails. Even GitHub pages may contain wallets with malicious injections, or those that manage to send out the newly generated private keys over the Internet. Wallets may also create tainted seed phrases, which are known to the malicious actor that planted the wallet.
Faked Wallets, Ponzi Schemes May Steal Coins
Extra vigilance may be required when downloading wallets for Bitcoin or other crypto coins. This type of scam has been around for a long time, but the new coronavirus measures may revive the attempt to steal coins. The other risk involves the pressure to buy Bitcoin and pay ransomware demands, or extortion emails. Those types of scams may increase, to feed off the general sense of chaos.
The third type of scams may include Ponzi schemes or promises of passive income. Putting Bitcoin or any other crypto into these schemes has a big potential for losses. Social media, and especially Discord and Telegram channels are also some of the usual vectors for spreading scams and fake schemes.
A smaller risk may be a renewal of cryptojacking, or hidden mining that overloads consumer electronics.
The other risk for newcomers is to be drawn into high-leverage BTC derivative trading, instead of just diversifying with actual Bitcoins. Derivative betting on the price of BTC, especially given current volatility, may be extremely risky, and lead to deep losses. The price slide of Bitcoin may continue, as pessimism has gripped the markets. But holding onto actual coins is still better than falling for an outright scam. The best approach is to be skeptical of newly created exclusive offers, especially those promising high returns.
What do you think about potential Bitcoin and crypto scams during the coronavirus measures and lockdowns? Share your thoughts in the comments section below!
Images via Shutterstock, Twitter: @BYHAMMOUD
Author: Christine Vasileva