A quick guide on how to save yourself from crypto investment scams in 2024

Cryptos are tempting.

With promises of high returns and the allure of cutting-edge technology, the crypto space is able to attract experienced and novice investors and traders alike. However, this emerging market is also not immune to scams and scams. Staying informed and vigilant is critical to being a safe part of this area.

When we talk about India, online investment scams in crypto assets have been one of the major causes of financial losses, with fraudsters siphoning off millions of rupees from unsuspecting investors every day.

Scammers prefer to play with people’s emotions, targeting both uneducated and educated audiences. Educated people tend to be frequent victims because of their greater financial involvement.

Although the world is becoming digitally centric, we lack digital awareness in various areas, which includes basic online security measures such as SMS verification protocols, detecting fraudulent Telegram channels, recognizing fraudulent investment schemes or distinguishing fake cryptocurrencies.

This lack of awareness and knowledge, combined with the lure of quick and substantial returns, makes it easy for scammers to succeed. Staying informed and focusing on becoming digitally savvy is critical to combating fraud and scammers. Here’s a quick guide to protecting yourself from becoming a victim and making informed decisions about your investments.

Let’s check them out.

#1 Choose reputable platforms

When dealing with cryptos, always choose well-established, trusted and reputable platforms that are registered as brokers/reporting organizations with Regulatory Authorities. The platform you choose should have a strong reputation for security, user support, and regulatory compliance.

Before joining a platform, read user reviews, check their security features, and make sure they meet regulatory standards in your region. Look for transparency in their operations and clear communication regarding security practices.

#2 Avoid phishing scams

Phishing scams are the main threat and the most common in the crypto world. Scammers generally create fake websites or send emails that appear to be from legitimate crypto platforms to steal your data.

Here are some quick tips to avoid phishing scams:

• Double check the URLs. Always make sure the website URL is correct before entering any information. Fraudsters often use URLs that are similar but slightly different from the legitimate website.
• Be careful with email. Never click on links or download attachments from unknown or suspicious emails. Check the sender’s address and look for signs of authenticity, such as proper grammar and official logos.
• Have two-factor authentication (2FA). Adding an extra layer of security to your accounts makes it significantly harder for fraudsters to gain access. Use a 2FA method that requires a physical device, such as a smartphone app, rather than SMS, which can be intercepted.

#3 Beware of false promises

If an investment opportunity sounds too good to be true, it’s probably a scam. Beware of schemes that promise guaranteed high returns with little or no risk.

Common types of fraudulent schemes include:

• Ponzi schemes. These scams promise high returns that are paid out of new entrants’ investments rather than profits. They collapse when there are not enough new investors to pay returns to earlier investors.
• Pump and dump schemes. Fraudsters artificially inflate the price of crypto through false or misleading statements and then sell their holdings at the peak, leaving other investors with worthless assets.

Always do thorough research before investing. Look for reliable information about the project and its team, and be skeptical and don’t be tempted by any scheme that promises quick, guaranteed profits.

#4 Do thorough research

Before deciding to invest in any crypto, do thorough research to understand the fundamentals of the project, the team behind it, its use case and market potential.

Here are some key points to look for in project basics:

• White paper. The white paper should provide a clear and detailed explanation of the project’s objectives, technology and roadmap. Be wary of projects with vague or overly complex white papers.
• team Research the history of team members and advisors. Look for skilled professionals with proven industry experience.
• Community: An active and engaged community on platforms like Reddit, Telegram, and Twitter is a good sign of a project’s health and legitimacy.
• Partnerships. Look for trusted partnerships that add legitimacy to the project. Partnerships with well-known companies or institutions can be a strong indicator of credibility.

#5 Secure your investment

Security is paramount in the crypto world. Here are some best practices to keep your investments safe:

• Use hardware wallets. Hardware wallets like Ledger and Trezor are considered the safest way to store cryptos because they are offline and therefore less susceptible to hacking.
• Keep private keys private: Never share your private keys with anyone. Store them in a safe, physical place, such as a safe in your home or bank.
• Update the software regularly. Make sure your wallet and exchange apps are updated to protect against vulnerabilities. If possible, turn on automatic updates to protect against the latest threats.

#6 Be informed

Last but not least.

The crypto space is constantly evolving, with new scams popping up regularly. Staying well informed is the best thing you can do to protect yourself.

• Follow authoritative sources of Crypto News. Sites like CoinDesk, CoinTelegraph, and Decrypt provide reliable news and analysis.
• Join the community forums. Participate in discussions on platforms like Reddit, Telegram, and Discord. Reaching out to the community can give you valuable insights and warnings about potential scams.
• Participate in educational events. Webinars, conferences, and meetups will keep you abreast of the latest developments and best practices in the crypto world.

Bottom line

The potential for better earnings in the crypto space comes with significant risks, including the threat of fraud. so

• choosing reputable platforms,
• avoid phishing scams,
• skeptical of false promises,
• do a thorough research,
• securing your investment and
• Staying informed can greatly reduce the risk of falling victim to crypto investment scams.

Remember that the crypto market offers great opportunities, but also attracts bad actors. Vigilance and education are your best tools for safely navigating the crypto space.

Disclaimer: Cryptocurrency is not legal tender and is currently unregulated. Please ensure that you carry out a sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information presented in this section does not represent any investment advice or the official position of WazirX. WazirX reserves the right, at its sole discretion, to modify or amend this blog post at any time and for any reason without prior notice.