Cryptocurrency prices often experience a surge in scams when the market heats up. The fear of missing out (FOMO) is a major factor behind this trend, leading many unsuspecting investors to lose thousands of dollars. Staying alert and cautious during these exciting periods is crucial, experts advise.
The FOMO Effect and New Investors
Rising cryptocurrency prices attract many new and inexperienced investors eager to profit from the momentum. “Scammers exploit this excitement and target individuals who lack knowledge about virtual assets,” explains Stanford Cardoz, Anti-Money Laundering Director at BitOasis.
One Dubai-based crypto investor, MB, recalls losing $60,000 in 2021 while minting a non-fungible token (NFT). “I came across a minting project on Twitter that seemed legitimate. But it turned out to be a phishing scam that accessed my wallet and stole my assets.”
Staggering Losses
Cryptocurrency theft has reached alarming levels. A 2024 report by Chainalysis reveals $2.2 billion in stolen crypto this year, with over 60% of these thefts linked to North Korea-affiliated attacks.
Globally, nearly $19 billion has been stolen since 2011, including $6 billion from security breaches, $5 billion from DeFi hacks, and $8 billion from fraud, as reported by Crystal Intelligence.
Evolving Scams and Sophisticated Tactics
Scammers are becoming increasingly innovative. MB shares another incident from 2024 when he lost $5,000 to a fake website mimicking a legitimate crypto project. “They used identical designs but changed the smart contracts. Now, I use tools like Pocket Universe to avoid scams and verify Twitter pages.”
Sophisticated scams include fake Zoom or Discord updates that give fraudsters access to scan your computer, or scammers posing as collaborators to gain control over your crypto assets. MB also recalls granting Discord access to a scammer in 2022, leading to losses for his community members.
Another victim, Fazlur Rehman, lost $90,000 in a scam involving a fraudulent decentralised exchange. “I was added to a WhatsApp group where others shared fake success stories, encouraging me to invest more. When I tried to withdraw funds, the platform blocked me,” he says.
Protect Yourself from Crypto Scams
Experts emphasize the importance of due diligence and regulatory frameworks. “The UAE offers comprehensive virtual asset regulations, which enhance consumer protection,” says Mr. Cardoz.
Law enforcement agencies in the region, including the Virtual Assets Regulatory Authority (VARA), work closely with companies like BitOasis and Crystal Intelligence to combat fraud.
Still, investors must remain vigilant. Common scams include impersonation, fake investment opportunities, and romance scams. Fraudsters often use advanced tactics like deep fake technology and social engineering to deceive their victims.
Tips to Avoid Crypto Scams
- Sign up with licensed and regulated platforms: Research and verify Virtual Asset Service Providers (VASPs) before investing.
- Secure your accounts: Use multi-factor authentication and never share your private keys.
- Avoid unsolicited offers: Be wary of messages or links from unknown sources.
- Report scams immediately: Contact your digital asset provider or local law enforcement, such as Dubai Police’s smart police stations.
Cryptocurrency offers exciting opportunities but comes with significant risks. By staying informed and taking proactive steps, you can protect your investments and avoid falling victim to scams.
