CRYPTO SCAMS

FARAH KHALFE farah.khalfe@anapublishing.com

Nothing has been more polarising in the modern world than cryptocurrency. While some swear by its value and have earned unfathomable amounts of money in record time, others are still skeptical, and simply do not understand what it is or how it works.

Cryptoassets, or cryptocurrencies as they are commonly called, are digital representations of value that are transferred, traded, and stored electronically. Some of the more well-known crypto-assets include Bitcoin (BTC) and Ethereum (ETH). They have been used for payments, investments, and capital-raising.

Yes, there are always risks to any investment, but cryptocurrency has drawn criticism for being an intangible asset, as well as not being regulated by a central bank.

Despite this, many people are flocking to the digital currency in the hopes of earning high returns or utilising it as a “get rich quick” scheme.

According to the Financial Sector Conduct Authority (FSCA), the high risks already inherent in crypto assets are further being compounded by scam activity. “There are many unregulated firms targeting consumers with marketing material that highlights the rewards, but not the potential downsides of investing in crypto assets,” it said.

Since crypto-related investments are not regulated by the FSCA or any other body in South Africa, if something goes wrong, you are unlikely to get your money back and will have no recourse against anyone.

With this in mind, multiple crypto-related scams can catch people off guard if they’re not vigilant enough. Here are some common ones:

Imposter Websites

There is a surprising number of imposter websites that have been set up to look exactly like valid, authentic company websites. When trying to trade, you may be redirected to another platform for payment. That platform, however, isn’t taking you to the cryptocurrency investment that you’re intending to visit and may be a scam. Remember, if there isn't a small lock icon indicating security near the URL bar and no “https” in the site address, it’s best to think twice.

Scamming emails

You may find emails in your inbox that look like they’re from a legitimate crypto company. It is common for scammers to announce fake ICOs or coin offerings as a way to steal your funds. It’s important to look over all the details. Is the email the exact same, and are the logo and branding identical? Can you verify that the email address is legitimately connected to the company? Always do your research and try to contact an actual person who works for the company regarding the email.

Fake Mobile Apps

Scammers make use of fake cryptocurrency mobile apps available for download through Google Play or the Apple App Store. Double-check the name of the app, the logo, colour scheme and copy to see if there are any misspellings. If you pick up something odd, it’s better to be safe than sorry.

Viruses and Malware

Sometimes all scammers need is a good old-fashioned virus to gain access to your crypto wallet and transfer all the funds out. These transactions are often irreversible and victims have no institution of authority to turn to for help. Install virus-detection software on your device and protect your wallet with two-factor authentication.