Cryptocurrency: Potential Scams
What is cryptocurrency?
Cryptocurrency is a virtual or digital form of currency that is a collection of binary data. It allows for online payments in the form of virtual “tokens." Some of the most popular cryptocurrencies include Bitcoin, Ethereum, and Litecoin.
The value and price of a given cryptocurrency can fluctuate based on the scale of community involvement. In other words, the value increases if the demand is higher than the supply. Investors can profit from this fluctuation in value by buying at a low price and selling when it rises, much like the stock market.
What are the risks?
The market for crypto investment is very volatile and often changes rapidly. Different cryptocurrencies are created every day, but not all are successful or profitable. Navigating this market can be very difficult for experienced investors, let alone beginners. Unfortunately, we have encountered several members who have been given poor or even fraudulent suggestions on investments that have ended in monetary loss.
Members have been contacted online by friends or loved ones who are promoting a new form of crypto. They claim to have invested and made a lot of money. The problem? The members are actually communicating with hackers, who have gained access to the friends' social media accounts.
Once the member buys tokens, the hackers then sell their tokens for profit. This depletes the value and leaves the member at a loss.
There have also been instances of members taking investment advice from influencers, or online media personalities. These influencers generally have little insight or experience or are acting maliciously. The scam is similar-- after their audience has invested in a certain crypto, the influencer then sells all their tokens for profit, leaving everyone else at a loss. This is commonly referred to as a pump and dump scheme.
What should you do?
In both cases, although there is deception involved, the victim has willfully purchased the crypto, and thus they are not able to dispute the charges for reimbursement.
Many people are interested in the future of cryptocurrency. While there are benefits, there is also a lot of risk involved.
We highly recommend speaking with a financial professional or advisor for guidance and assistance before making any investment, especially when cryptocurrencies are involved.