Authored By: Airell Ang, Legal Associate, Magna Law Corporation
 
Losing funds in cryptocurrency often happens because the victim forgets the most basic principle of cryptos and blockchain: cryptocurrency transactions are not reversible. When you send cryptocurrency to someone else, you can neither reverse it nor stop payment. Just because the transaction is recorded on the blockchain this doesn’t mean that there is a way to get those funds back once they’ve left your wallet.

The number one way people get scammed is by answering password questions about their crypto wallets. If anyone (and this applies even to your closest friends!) asks you for your key passwords (or phrases) never give these out. Good password security should be the bedrock on which you base your entire crypto investment portfolio. In short, guard your passwords, or phrases, jealously; write them down and put them in a fireproof safe!

The other way people get scammed concerns emails that you may receive from domain names which seem to be legitimate but aren’t. Scammers can make a domain look like any other domain name in your email client. There are an astonishing number of websites that have been deliberately created to resemble original, legitimate start-ups. This is called phishing. One dead giveaway is that the fake domains will seldom feature the small lock icon adjacent to the URL bar.

Another trick they can pull is to redirect you from the seemingly legitimate domain to another platform to make payment. Such fake payment sites may have been set up using a zero in the URL instead of a letter ‘o’. You can be assured that such platforms aren’t bringing you to the cryptocurrency investment that you are expecting. To avoid this, carefully re-type the exact URL into your browser and double check it.

Fake mobile apps are a variation on this theme. Thousands of people have already downloaded fake cryptocurrency apps according to Bitcoin News, and although Google Play and the Apple App Store remove these fakes as fast as they are posted they can still create havoc with investors. Users are advised to check the branding of the app, its colours and the logo being used? Very often these are a giveaway.

The same applies to email solicitations from seemingly genuine companies. Again, scrutinise the logo and branding carefully. Can you verify that the email address is really linked to the company it’s purportedly from? One way of checking on an email’s provenance is to ask for a real world person working within the company. Never ever click on an embedded link within an email. Also check out the A’s and I’s and L’s especially, since there are other alphabets from character sets that look like the “regular” letters that are from the real, original email senders.

Never trust offers or tips emanating from either Twitter or Facebook, especially if the offer seems too good to be true. This is especially true if you are following the social media accounts of celebrities as fake celebrity accounts are rife, and often specifically created with crypto scamming in mind.

Such social media scams frequently take the form of attractive giveaways. To qualify for the giveaway you will be asked to send a small amount of crypto to “verify” your address. Above all, never send crypto to anyone who contacts you who you do not already know. This is especially so in the case of online chats. Not even when you’re being offered a great deal in return for advancing a small amount of crypto upfront. The bottom line is that no legitimate company would run a promotion where you had to send them cryptos first before they would send you even more.

Even if others are sending crypto to these fake accounts, don't follow the herd! Never send cryptocurrency to giveaways under the guise of address verification. Be sceptical of all giveaways and offers on social media.

Scammers and phishers are ingeniously clever. They will sometimes set up fake customer support lines, even for such well-known crypto exchanges as Coinbase. Victims are lured to these fake support lines through all the methods outlined above in this article and persuaded to give out their wallet passwords, 2FA (2-Factor Authentication) security codes or passwords, or even remote access to their computer. Always verify that you are calling the correct support number for the platform or exchange you are trying to seek from.

All too often scammers announce a fake ICO (Initial Coin Offering). Investors put crypto into these ICOs and the next thing you know, the founder has vanished taking your crypto investments with them. Scrutinise all ICOs with a fine tooth comb and peruse the details carefully.

From a personal standpoint you can also secure yourself better by upgrading your computer to make it more secure and less hackable. Conduct good Internet hygiene and perhaps use VPNs and firewalls to safeguard your PC port. At least learn the basics of computing before venturing into crypto trading and investing.

There has been an increase in cases whereby wallets are hacked and users getting scammed. Currently, there are no standard regulatory frameworks within the crypto industry that consumers can go to. However, to reduce the risk of getting scammed or hacked, individuals should go to a proper, credible company or platform such as Magna Law Corporation when making crypto transactions.

Companies like Magna Law will advise investors to keep hot or cold crypto wallets because the risk of being scammed is much lower due to the unusually long string character password key. It also has a feature that disables access when disconnected from the internet.

Individuals should also approach approved (exempted or licensed) cryptocurrency service providers as they are the only ones compliant with the MAS Payment Services Act. In the unfortunate event that you are scammed, don’t worry all is not necessarily lost. Companies like Magna Law Corporation can and do work with investors and law enforcement to attempt to recover stolen funds and bring the perpetrators to justice. The regulatory framework for crypto may be less rigorous than for conventional finance but that situation is changing for the better with every passing year, as more governments crack down on errant bad actors and put transparent measures in place for exchanges to operate within sovereign countries.