How to Protect Yourself From Cryptocurrency Scams in South Africa
In the daily rush for digital gold, more people are attempting to make money from cryptocurrencies. As a result of the insatiable demand for cryptocurrency, the number of criminals and con artists has also increased. The world appears to have gone ‘crypto-crazy.’
The popularity of digital currencies such as bitcoin, Monero, Ethereum, and even Dogecoin is growing by the day. Their skyrocketing value bodes well for investors. Unfortunately, most cryptocurrency enthusiasts appear to be two or more steps ahead of scammers. The unregulated nature of cryptocurrencies has resulted in a continuous breeding of cryptocurrency scammers.
Scams involving cryptocurrency in South Africa
Africrypt, based in South Africa, was reportedly hacked in 2021. Africrypt investors’ money was stolen by hackers for a staggering $3.38 billion.
While the apparent hack made global headlines, the founders of Africrypt (two brothers) vanished as international investigators struggle to figure out what happened. Ameer Cajee, the elder brother, informed clients that the company had been hacked. He asked them not to report the incident to authorities because doing so would slow the recovery of the missing funds.
It is now suspected to be a completely fraudulent cryptocurrency investment platform, with the founders disappearing with approximately 69,000 coins following the rise in the value of Bitcoin in 2020.
Because there are few, if any, regulations governing the cryptocurrency market for investors, cryptocurrency scams are on the rise. Consumers who want to get rich quickly are also drawn in by rising cryptocurrency prices. Such customers are an ideal target for con artists.
Finally, phishers can use the allure of mining coins for money as a hook.
Scams involving cryptocurrency are common.
Here are a few examples of common scams:
Pump and dump: Scammers use false information to persuade investors to buy shares in unknown cryptocurrency companies. Following that, the share price rises, and the fraudster sells their own shares, making a tidy profit while leaving the victim with worthless stocks or coins.
Fake celebrity endorsements: Scammers take over celebrity social media accounts or create fake ones in order to entice followers to invest in bogus schemes like the ones described above. In a recent ruse, $2 million was lost to scammers who even named-dropped Elon Musk into a Bitcoin address to make the ruse more credible.
Ponzi schemes: Ponzi schemes are a type of investment scam in which victims are duped into investing in a non-existent company. Most of the time, it is a get-rich-quick scheme. Cryptocurrency is ideal for this because con artists are constantly inventing new, unspecified ‘cutting edge’ technology in order to attract investors and generate larger virtual profits. When the currency is virtual, it is simple to falsify the data.
Fake and clone exchanges: Fraudsters send emails or post messages on social media promising access to virtual cash stored in cryptocurrency exchanges. The only catch is that the user usually has to pay a small fee first. The exchange does not exist, and their money is forever lost. Copycat sites appear to provide legitimate wallet services. Users are encouraged to install wallets, which then install malware on their device. In these cases, iOS devices have been compromised, whereas previously, the problem was limited to Android devices.
Phishing: One of the most common social engineering techniques used by scammers is phishing. Emails, text messages, and social media messages are spoofing to appear as if they were sent by a legitimate and trusted source. It usually has an urgent request for payment in cryptocurrency.
How to avoid falling a victim
- Never provide your personal details to an entity that makes unsolicited contact with you, via email, text, or social media. It may even appear to be your friend. However, in reality could be a hacker who has hijacked their email or social account. Check with them separately via another contact method
- If something is too good to be true it usually is. Take any investment scheme with a heavy pinch of salt
- Switch on two-factor authentication for any cryptocurrency account you have
- Dismiss any investment ‘opportunity’ which requires an up-front payment
- Never use unofficial app stores
- Download anti-malware software from a reputable provider to your PC and mobile devices
If you don’t believe the hype or fall for something that seems too good to be true, you’ll have a good chance of staying safe.
