The rise of cryptocurrencies and blockchain applications has surely been fascinating in the UAE. Technological advancements and the fast-paced new trading model continue to draw large numbers, yet this also includes some crypto scams. The concept of making the most of fresh investment possibilities while avoiding scams and fraudulent ICOs might be overwhelming for cryptocurrency investors.
Although people are more informed now than in the past, new frauds are somehow committed regularly.
Let’s check out the top 7 common cryptocurrency scams to be aware of in the UAE:
1. Crypto Investment Schemes
The main idea behind these scams is to convince investors to put their money into the scheme by promising huge returns in a short period of time. They utilize a variety of strategies to get individuals to join their schemes, including social media marketing, celebrity endorsements, and promises of unique investment possibilities.
When investors submit money to a fraudster, the funds are usually not invested as promised. Instead, the fraudsters often use the money to repay previous investors or to retain it for themselves. This is referred to as a Ponzi scheme, in which new investors are used to repaying previous investors, resulting in a cycle that collapses when new investors are no longer available to keep the plan running.
2. Phishing Scams
Crypto phishing scams attempt to steal cryptocurrency from investors by fooling them into disclosing their login credentials or private keys to their digital wallets. These frauds often target a real organization or service provider, such as a Bitcoin exchange or wallet provider, via email, social media, or other online communication channels.
A phishing scam usually follows a similar pattern. The first message looks to be from a respectable Bitcoin exchange or wallet provider. The message will include a link leading the receiver to a bogus website that appears exactly like the real thing. The message may request that the recipient verify their account information or require further action, such as changing their password or downloading a software update. Scammers use this sensitive information to steal their cash after it is entered.
3. Fake Initial Coin Offerings (ICOs)
Initial coin offerings (ICOs) are a popular way for new cryptocurrencies to acquire funding. Fake ICOs can take various forms, but they often entail the creation of a professionally designed website and marketing materials, with claims of big rewards, low risks, and revolutionary technologies. They may use fake referrals, false reviews, and other deceptive strategies to gain credibility and entice others to invest.
After investors contribute money to the bogus ICO, the organizers may employ a variety of methods to steal the proceeds. They may just take the money and then vanish, never to return with the promised Bitcoin or token. They might even use the cash to generate a bogus cryptocurrency or token that has no actual value and cannot be sold or traded on a marketplace.
4. Malicious Smart Contracts
If you have cryptocurrency in your wallet and are interested in decentralized financial platforms, or NFTs, you should be cautious of malicious intelligent contracts. Malicious smart contracts are applications that are meant to deceive users into handing over their digital assets or personal information. These contracts are frequently designed to appear genuine, but instead of serving their original purpose, they contain secret codes designed to hack user wallets and steal cash.
One typical method for bad smart contracts to defraud individuals is through “phishing attacks.” The bad contract in a phishing attack will imitate a legal contract, such as a token sale or a decentralized exchange. Users will be requested to link their wallets and will frequently be required to execute an “approval” transaction. While this is true for genuine smart contracts, malicious contracts will employ an ‘approve-all’ function, allowing all assets in the wallet to be stolen all at once.
5. Scams related to Malware
Malware has always been the basis of many internet frauds. However, given the nature of the money itself, it offers an even larger risk with cryptocurrency investments. A few months ago, Bleeping Computer, a tech assistance website, published a warning about malware that targets Bitcoin addresses to manage its transactions. According to them, CryptoCurrency Clipboard Hijackers malware works by scanning a user’s Windows clipboard for cryptocurrency addresses. If one is found, it will replace it with an address under their control, ensuring that any funds transmitted are received by the scammers rather than the intended receiver.
6. Cloned Websites
To steal cash and personal information, exact clones of real crypto exchanges or ICO websites have been employed. You’d be shocked at how many phony websites and URLs have been put up, so always double-check the URL before entering any personal information on the web. Impostor websites will utilize similar letters and numbers in the URL to make it appear similar to the actual one at first sight; for example, the fraudsters may use a “n” instead of a “m” or replace an o with a 0 instead.
7. Scam of the Pump and Dump
While this sort of fraud is not limited to cryptocurrency investments, it is extremely risky in the online arena. The main concept here is to control the price and volume of a lesser-known, lower-cap currency by talking about it on investing websites and blogs. Once the fraudsters have put in enough money to inflate the coin’s value, they cash out and “dump” the consequent losses on the novice investors who purchased the currency believing it was the next great thing. It is simply a pyramid scheme.
What To Do If You’re Scammed?
In the UAE, if you have been scammed, you can take many actions to try to recover your assets and protect yourself from that fraud.
Following are some general guidelines:
Report the Scam to the Authorities
You may need to report the fraud to law enforcement, financial authorities, or consumer protection organizations, depending on the kind and severity of the scam. Unfortunately, due to the large number of frauds performed offshore, authorities can only do so much. Your Bitcoin exchange is one crucial contact that is missing—if the fraud utilized the exchange in any manner, be sure to notify them.
Change Your Login Information and Passwords
If you provide the scammers with your login credentials or other sensitive information, change your passwords right away and keep an eye on your accounts for any unusual activity. Even if you only give a password for one account, it is advisable to do a security audit of all your devices and update passwords as needed. Use two-factor authentication whenever possible.
Be cautious of Further Contact
Scammers may approach you again, claiming to be officials or attorneys and offering to assist you in recovering your cash. Be aware of unwanted contact and always confirm the identity of the person with whom you are speaking before providing any more information or finances. If you receive messages that you believe are real, always close the conversation or hang up the phone and go directly to the organization’s official website. Once there, contact the relevant support services and confirm that the communication was real. This ensures that you are always communicating with an official representative of the organization.
Can you get your Money Back From a Crypto Scammer?
Regrettably, there is no certainty that you will be able to recover money lost in a cryptocurrency investment scam. The possibility of recovering the money depends on each unique situation, as well as the speed with which you respond to the incident. The first step is to report the scam to the proper organization, such as the crypto exchange, financial institution, or card issuer, in case any stolen cash can be frozen. The incident must then be reported to the appropriate authorities. This can aid in bringing the scammers to justice and preventing others from becoming victims of the same scheme.
While completing these actions quickly enhances the possibility that some funds may be recovered, nothing is definite, and the best way to recover stolen assets is to prevent them from being stolen in the first place.
The Bottom Line
While there are several frauds, schemes, and offenders of various fraudulent acts in the crypto world in the UAE, continuing with reasonable skepticism and care is critical. Buy BTC, ETH, LTC, XRP, and other cryptocurrencies with a credit card, experience lightning-fast transactions, and keep track of your investments from the UAE and anywhere in the globe.
Despite the fraudulent efforts, other respectable and well-run projects like Bitmine make investing in cryptocurrency worthwhile. By simplifying mining, Bitmine transforms the Bitcoin environment. It allows everyone to engage and earn money, making cryptocurrency more accessible and valuable. Even newbies can mine with ease thanks to user-friendly UI and optimal hardware. Bitmine improves network security by extensively sharing hash power. Its sustainable method decreases environmental effects, earning it credit for sustainability. With Bitmine the crypto world becomes more inclusive, profitable, and ecologically conscious – a win-win situation for me, miners, and the globe.