How to avoid cryptocurrency scams, 7 On Your Side outlines tips
NEW YORK (WABC) -- They've been termed the Wild West of investments. Cryptocurrency, The white-hot popular digital currency with volatile values that can boom and bust in days or even hours and little regulation.
When there are large amounts of money to be made or lost, that's when scammers swoop in.
A recent report by Bolster found more than 400,000 Cryptocurrency scams were reported just last year alone.
That's an increase of 40% year to year. That number is expected to jump an additional 75% this year costing consumers tens of billions.
So what are the most popular cryptocurrency cons? First, there's the fraudulent giveaway. A fake ad uses pictures of Bitcoin billionaires Tyler and Cameron Winkelvoss without their permission, promising twice your payment back if you contribute. Another fraudulently uses Tesla founder Elon Musk's picture promising to double your return.
Others are fake ICOs, or initial coin offering. A legitimate ICO will raise money for a new cryptocurrency company. But, fraudsters create a fake company, stir up hype online, persuading investors to buy. According to published reports, fraudulent ICOs cost investors $375,000.
Also, Ponzi schemes may be easy to spot but people still fall for them. U.S. officials say OneCoin ran a $4 billion Ponzi scheme. Remember, if an investment promises returns, it's a tell-tale sign of a Ponzi.
There are some big takeaways.
First, be wary of crypto investment pitches that come on social media platforms or from cold callers.
Watch out for heavy sales pitches to "invest now." Pump and dump schemes make an investment look like its value is rising and then crashes after you invest.
Remember to research before you invest. Never wire money or provide any credit card or bank account information until you check the investment out first.
For more information on avoiding cryptocurrency scams please visit: https://www.bbb.org
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