Investing is intimidating at the start. You’re putting your money in a place and not allowed to touch it for the next decade (based on the best principles). But if you succeed, you will likely achieve your financial goals.
Another intimidating aspect of investing is the rise of scams in the space. Cybercriminals are flocking to the niche (because they know investors have money) and doing everything in their power to get your hard-earned money. We’ll go over the ways to notice a scam versus a legitimate opportunity.
Crypto Scams
The blockchain technology behind cryptocurrencies ensures every transaction is recorded on the ledger. The blockchain has incredible use cases, and the whole sector is booming with investments and builders in decentralized finance, gaming, and many other niches. But (and this is a very big but) there’s a catch.
The whole point of crypto is its anonymity. No one knows who is sitting behind the wallet address, and fraudsters can commit crimes with zero repercussions. That’s why there is such a bad stigma about it. You might receive exciting news about joining a pre-sale of a promising new token, the next big meme coin with potential for explosive growth, or a new exchange listing the hottest projects, including Top Solana Meme Coins. All those are red flags. Invest only in trusted trading platforms that have been around for years.
Romance Scams
How do romance scams get classified as investment scams? Well, fraudsters are sneaky like that. It doesn’t start as an investment scam. Romance scams start when the scammer starts talking to you on a dating or social media app and gaining your trust. After talking for a few days or weeks, they’ll subtly include an investment tip for you that they’re joining, and it’s always a scam.
Slow down the conversation when you meet someone online and not in person, and they start talking or asking about money. Your emotions can force you to make a mistake. Ask for an in-person meeting, and if they come up with excuses, block them immediately. Romance scams are on a massive rise, so be careful.
Pump And Dumps
You might receive a phone call from an investor promoting an outstanding deal on a stock that’s about to blow up. You do some research, and all the boxes check out. But you don’t know that the person who contacted you (or the company that hired them) has a massive allocation of this stock. And the price keeps increasing as they’re onboarding more people to buy it. As soon as the value reaches the perceived top, they sell everything and leave you hanging with worthless pieces of that company. Before investing in anything, check the credentials of the person who contacted you and the entity. Take your time, and never invest on the same day you were contacted. It’s rarely a good thing to rush.
Affinity Fraud
How do Ponzi schemes spread so fast? Usually, scammers will target a workplace, a religious community, or a volunteer group. They will become part of it and slowly gain their trust. Then, one day, out of nowhere, they’ll start talking about investment opportunities (pyramid schemes in disguise) and say you’ll have high returns if you join fast. They can take your money to pay off previous investors or just run away and join another group.
AI Scams
The newest trend is using AI in investment scams. Artificial intelligence can replicate the sound of anyone’s voice and even make realistic videos called deep fakes. You can see an ad of a celebrity promoting a specific company or stock, and you fall for it. It’s only after you send the money that you realize it’s a scam.
If you get a call (even from a friend or family member) or see a video of a celebrity, take a couple of breaths and slow down. Try asking them a question to confirm their legitimacy. If you’re doubting the whole situation, hang up and call them back using a number you trust.
How can you protect yourself?
All investment scams have a few things in common:
– They pressure you to act immediately.
– It’s low risk for a high reward.
– Scammers promise to have insider info or a hot tip.
– They’re not registered to give investing advice.
You might click on a link a scammer sends you and notice something’s off. But there’s a danger in that, too. Smart hackers can grab your IP address, giving them more information on you. Now, you might be thinking, what can someone do with your IP? The answer is a lot of things. They can:
– Hack your device.
– Steal your private data.
– Target you with DDoS attacks.
– Know your actual location.
– Track your online activity.
– Send you targeted spam and ads.
– Ban your IP from specific websites.
By default, you should use cybersecurity tools like antivirus, firewall, and VPN. A combination of these three will keep you protected from almost every attack except human-factor mistakes.
