According to a U.S. Federal Bureau of Investigation report, Americans lost collective billions to cryptocurrency scams in 2023. While cryptocurrency has taken the financial world by storm, scams targeting potential crypto investors have also increased. Navigating crypto opportunities from threats may not always be easy, but with a few key tips, you can better protect yourself from falling victim to fraudulent schemes. Here are seven tips to help you avoid crypto scams:

1. Do Your Research

   Doing your due diligence is important in any investment, and crypto is no different. Thoroughly research any cryptocurrency, every platform and every player before investing. Look for reviews. Check teams behind projects and verify their credentials. Ensure you know who and what you’re dealing with when seeking crypto opportunities.

2. Watch Out for Imposters

   Some scammers impersonate well-known companies, including ones you may have a legitimate relationship with. They might say there’s fraud on your account, or your money is at risk—and, to fix it, you need to buy crypto and send it to them. They may call pretending to have a unique opportunity you should act on. Make sure you communicate with known companies on known and familiar channels. If you’re unsure, hang up or contact them on a familiar channel and verify the attempt at communication.

3. Beware of Unrealistic Promises

   Time in the market usually beats timing in the market. Just because crypto is innovative doesn’t guarantee overnight investing success. Get-rich-quick schemes or promises of high returns with little risk are likely scams. Be skeptical of anything that sounds too good to be true.

4. Use Reputable Exchanges

   Stick to well-known and reputable cryptocurrency exchanges. Avoid using exchange platforms that are not widely recognized or have a history of security issues. Well-known exchanges often comply with regulatory standards and undergo regular audits, giving you an added net of transparency and safety.

5. Avoid Unsolicited Offers

   Be cautious of unsolicited offers, whether via email, social media or phone calls. Scammers often use these methods to lure victims with promises of exclusive investment opportunities or insider deals. Always independently verify the legitimacy of any offer.

6. Understand the Technology

   Learn about blockchain technology and the fundamentals of cryptocurrency. Educate yourself to get a basic understanding. Scammers often rely on the complexity of the technology or exploit the user's or potential investor's unfamiliarity with the crypto space to confuse and deceive victims. As with any investment, make informed decisions.

7. Check for Regulatory Warnings

   Before investing, check if the project or platform has any warnings from regulatory bodies. Many financial authorities maintain lists of known scams and fraudulent entities or groups. You should be cautious and avoid any project or group that regulators have flagged.

Staying vigilant and informed is crucial in the evolving world of cryptocurrency and investments. You can significantly reduce your risk of scams by doing your research, staying skeptical of unrealistic promises, using reputable exchanges and keeping up with the latest news and information.

To learn more about common frauds and scams, visit Cadence Bank Fraud and Security Center, which offers resources on how to protect yourself from being victimized.

Sources:
https://www.cnbc.com/2024/09/13/how-to-identify-potential-cryptocurrency-scams.html
https://www.forbes.com/sites/digital-assets/2024/09/15/how-investors-can-avoid-the-crypto-scam-surge/
https://www.forbes.com/sites/zakdoffman/2024/08/01/fbi-issues-new-warning-if-you-buy-cryptocurrency-from-an-exchange/
https://consumer.ftc.gov/articles/what-know-about-cryptocurrency-and-scams

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.