Making Crypto Not So Cryptic

Making Crypto Not So Cryptic

“Crypto” is certainly a financial buzzword these days. But what IS cryptocurrency, exactly? What should you be on the lookout for? These are questions we aim to answer with this blog, for International Fraud Awareness Month.  

We’ll lay out the truth about crypto and arm you with all the knowledge necessary to avoid crypto fraud, should you choose to invest.  

What is Cryptocurrency? 

According to the Federal Trade Commission, cryptocurrency is “a type of digital currency that generally exists only electronically. You usually use your phone, computer, or a cryptocurrency ATM to buy cryptocurrency.” Bitcoin is the most well-known type of cryptocurrency, but there are many other kinds, and new ones continue to be created. 

Even though crypto has been a hot investment for a while now, there’s still quite a bit of mystery surrounding it, and scammers are ready and waiting to take advantage of that. Crypto scams are particularly bad because the digital currency isn’t subject to regulations or government oversight, and once a crypto transaction occurs it cannot be undone. Another thing to remember is that cryptocurrency values fluctuate all the time due to a variety of factors. 

Common Cryptocurrency Scams from FTC.gov  

  • Social Engineering Scams
    • Phishing, romance, tech support, grandparent, organization, or alleged government agency insists on payment via cryptocurrency.
  • Social media
    • Any tweet, text, email, or message on social media that asks for cryptocurrency. Examples: A friend makes contact on social media, claiming they are caught up in an emergency and need immediate rescue, but only through cryptocurrency.
    • A celebrity or famed cryptocurrency investor is sponsoring a cryptocurrency investment or giveaway.
  • Investment opportunities
    • Promised big payouts with guaranteed returns for a small investment in a specific cryptocurrency.
  • Investment Managers
    • Unsolicited offers from investment managers who promise to grow money if cryptocurrency is sent to an account or digital wallet they control.
  • Pyramid Scheme
    • Become an investor in a program through which, rather than making money off any actual instrument (such as the rising value of bitcoin over time), you make money off the subsequent investors who follow you into the investment. 
  • Unsolicited Job Offers
    • These offers help recruit investors to sell or mine cryptocurrency or help convert cash to bitcoin. They’ll also list phony jobs on employment websites where they promise you a new job (for a fee) but wind-up stealing money or personal information instead.
  • Blackmail
    • Emails are sent to targets, falsely claiming to have compromising photos, videos, or embarrassing information about them. They threaten to go public unless the victim pays up via cryptocurrency. 

Reporting Crypto Fraud 

If you come across or fall victim to cryptocurrency fraud, it’s important to report it. Here’s what you can do. Report fraud and other suspicious activity involving cryptocurrency to:  

Key Takeaways 

  • Cryptocurrency is a form of investment growing in popularity but doesn’t come without concerns. 
  • Exercise extreme caution when investing in cryptocurrencies. 
  • Familiarize yourself with the types of fraud attempts that can occur when dealing with cryptocurrency. 
  • Report any suspected or actual crypto fraud to the proper authorities. 

PSECU works hard every day to keep your money safe. This year, for International Fraud Week, we are joining others who seek to minimize the impact of fraud by promoting anti-fraud awareness and education. We’re focusing on cryptocurrency fraud to help demystify this emerging currency and help you avoid scams and fraud. 

The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by PSECU. PSECU does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. PSECU does not warrant any advice provided by third parties. PSECU does not guarantee the accuracy or completeness of the information provided by third parties. PSECU recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.