Spot a Ponzi or a romance scammer: Here’s how to protect yourself against crypto scams

Cryptocurrency is a new technology where things are always changing and evolving. But criminals are also paying attention to these changes, constantly adapting their methods to try to get hold of your crypto. 

At Luno, safeguarding our customers and their investments is our top priority. But the first line of defence against scams is you. And the most important step to protecting yourself against scams is staying up to date with the various methods criminals use to gain access to your investments. 

Social media scams

Operating in a purely digital world has made social media a convenient hunting ground for scammers. From fake accounts promising huge returns on investments, to enticing offers that seem too good to be true, these scams can take various forms. 

If you ever encounter suspicious communications on social media, remember that reporting them is crucial. Report it to the social media platform and forward questionable messages to [email protected] to help protect yourself and others.

Want to know how to spot and protect yourself against a scam on WhatsApp, Instagram and other social media? READ HERE.

Romance Scams

Romance scams involve building an emotional connection with victims over time, and using this false trust to convince them to part with their money. 

These scams often begin with a scammer creating a fake profile that portrays a life of luxury. The scammer then establishes communication, frequently bombarding victims with messages of affection and understanding.

These scammers are skilled in emotional manipulation, preying on the need for human connection. They might send you frequent messages, voice notes, or even make phone calls, gradually creating a sense of intimacy and trust. 

With crypto-related romance scams, the scammer’s goal is to subtly introduce cryptocurrency into the conversation, often portraying themselves as wealthy crypto traders. With carefully crafted narratives, they lead victims to believe that investing in crypto is an expression of their love and commitment.

⚠️ Some red flags to look out for

• The relationship moves fast
• They lure you off the dating site to instant messaging or social media early on
• They prefer chatting instead of video calling
• They cannot do video calls because their phone or laptop’s camera is broken
• They promise to visit and cancel at the last minute due to an emergency
• They ask you to send money until their investments pay out
• They instruct you to use specific payment methods (wire transfers or crypto sends)
• They persistently offer to help you buy and trade crypto
• They ask you to share personal information
• They ask you to commit financial fraud on their behalf

For  more information about romance scams, READ HERE. 

Ponzi and pyramid schemes

Ponzi and pyramid schemes thrive on the trust and camaraderie of their participants. In the world of cryptocurrency, these schemes can be particularly deceptive due to the complex nature of the digital financial landscape.

At first glance, these schemes might seem legitimate, as early investors appear to earn returns on their investments. This illusion of success can motivate them to encourage friends and family to join, leading to a vicious cycle of deception.

It’s important to remain sceptical when presented with opportunities that promise unrealistic returns with minimal effort. Be wary of any investment that relies on recruiting new participants to sustain payouts – this is a classic red flag for a potential Ponzi or pyramid scheme.

⚠️ Here are some of the ways to spot a Ponzi or pyramid scheme

• The promise of unrealistically high “guaranteed” returns that don’t match returns offered by other companies in the industry.
  
• The scheme is generally framed as a risk-free way to earn passive income, promises financial freedom, or the opportunity to become your own boss.
  
• A website that doesn’t clearly state who owns the company or vaguely describes its management as “a team of crypto experts”.
  
• Information about the product, service, or business strategy does not exist.
  
• There is no way to verify how many people are part of the scheme, or how much money has been invested.
  
• Vague or complex business strategies that “customer service” can’t explain.
  
• Being prompted to purchase various packages, generally labeled as gold or silver, etc.
  
• You are encouraged to keep reinvesting your “profits” instead of withdrawing them.
  
• You are required to recruit new investors into the “investment fund” so that you can earn your “profit”.
  
• Your returns increase with the number of new members that you recruit to the scheme.

Read more about Ponzi and pyramid schemes, HERE. 

Stay informed to stay safe

As you navigate and learn about investing in cryptocurrency, keep in mind that scams can take many forms, preying on various aspects of human nature, including trust, emotion, and the desire for quick riches. Educate yourself about the different types of scams and their telltale signs. Always verify the authenticity of individuals and platforms before making any financial commitments.

Remember, operating in a digital world requires you to be vigilant and cautious. If something seems too good to be true, it probably is. By arming yourself with knowledge and staying alert, you can better protect yourself against the evolving landscape of cryptocurrency scams.