Retirement Planning, Elder Law, and Senior Finance

6/10/2021 | By Seniors Guide Staff

It should come as no surprise that as soon as something comes along to help you build your wealth, a few bad actors will be waiting in the wings to steal it. Cryptocurrency, the relatively new digital currency, is no exception. Anyone investing in legitimate crypto should be prepared for a wild ride. Heartburn-inducing plunges often follow meteoric price rises. Still, another more significant issue could leave investors with an empty wallet: cryptocurrency scams.

And even though the Federal Trade Commission (FTC) reports that younger adults (ages 20 to 49) were over five times more likely to be scammed than older adults, fraudsters will also be targeting senior investors, seeing them as easier prey.

Since forewarned is forearmed, here are the warnings for four cryptocurrency scams you need to be aware of to minimize your chances of becoming a victim of one of them.

1. Ponzi schemes

By now, almost everyone has heard of the Ponzi scheme. It’s a classic scam (first used 100-plus years ago) in which the first investors are paid with the money from new investors under the pretense of receiving gains from their investment.

The most significant crypto Ponzi scheme was Bitconnect. Released in 2016, Bitconnect allowed users to lend its value in return for interest payments that were supplied from the money received from new investors. Bitconnect collapsed in 2018, dropping to a value of under $1 from a high of $463!

The U.S. Securities and Exchange Commission (SEC) warns investors that Ponzi schemes like this typically promise a “no risk, high return” investment. Be aware that complex investment strategies and unusually consistent returns are also signs of fraud.

2. Imposter websites

You could become a victim of a cryptocurrency scam while following up on a genuine tip from an investment professional. By inadvertently visiting a fake website, you may lose your entire investment. And to the average person, these websites are virtually indistinguishable from a valid startup company’s website.

If the site doesn’t have a small lock icon (indicating security) near the URL bar and no “https” in the site address, think twice before entering. Although the site might look identical to the one you believe you’re visiting, scammers could direct you to another platform for payment.

Let’s say you click on a link that looks like a legitimate site. Scammers may have already created a fake URL with a zero in it instead of a letter “o.” That platform isn’t taking you to the cryptocurrency investment that you want. So, avoid this by typing the correct URL into your browser carefully. And then double-check it.

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3. Fraud wallets

Similar to the practice of phishing, fraud wallets come in the form of a website or a mobile app, just like a genuine crypto wallet. However, unlike the phishing method of sending out emails under the guise of a reputable company, fraud wallets usually wait for you to come to them.

Everything may seem authentic with its realistic-looking logo, high ratings, cool interface, and availability on the Apple App Store. And when you provide your information, link a credit card, and load your crypto into the wallet, the scammers have everything they need to do their dirty work.

Experts advise using the most prominent wallet players, make sure the wallets have blue checkmarks on their Twitter profiles, and visit websites only through official links.

4. Social media scams

Social media scams are as old as social media itself. And although they do not only involve cryptocurrency, many of them are hoping to get their hands on your digital currency. These cryptocurrency scams usually feature an account advertising significant gains, a survey, or something else that includes a link. Clicking the link can result in malware being installed on your device. Or, scammers can merely entice you into entering your information.

The social media scam is the easiest to avoid. Don’t click on any links if you don’t know a user. Also, keep in mind that scammers spread this scam on new accounts with neither followers nor a profile picture.

Understand that the cryptocurrency industry is not regulated, meaning that some people will use it maliciously. If something doesn’t look, sound, or feel right, that’s because it’s probably a cryptocurrency scam!

Seniors Guide Staff

Seniors Guide has been addressing traditional topics and upcoming trends in the senior living industry since 1999. We strive to educate seniors and their loved ones in an approachable manner, and aim to provide them with the right information to make the best decisions possible.

Seniors Guide Staff