Scams involving cryptocurrency, also known as digital currencies, are on the rise across the United States. These scams use common techniques, such as impersonating authorities or using online relationships to build trust. However, with the use of cryptocurrency, investigating and recovering funds has become even more difficult.
How can I avoid falling victim to a cryptocurrency scam?
No legitimate business or government agency will require you to pay using cryptocurrency.
If someone promises you free money or guaranteed investment returns that sound too good to be true, they are.
If you meet someone online who later pitches you an investment opportunity involving cryptocurrency, this is very likely a scam.
If you receive an unexpected email, phone call, text, or social media message, slow down and analyze the message. These tactics work by evoking urgency and fear. If you stay calm and work slowly, you will better recognize the red flags of a scam.
What should I do if I suspect I have been scammed?
The first step is to report the suspected fraud to the authorities. We also recommend notifying your advisor so that we can assist you with the process.
Report to the Federal Bureau of Investigation (FBI) through the Internet Crime Complaint Center (IC3).
Report to the Federal Trade Commission (FTC).
Report to the U.S. Securities and Exchange Commission (SEC)
Try to record as much information as possible to provide to the authorities. This could include:
Identifying information about who contacted you and how.
Any communication you had with the suspected scammer, including all instructions they may have provided to you.
Financial transaction details such as the cryptocurrency type and address, the date, time and amount of transaction, and a transaction ID or hash.
Do not pay additional fees or taxes to withdraw your money and do not pay for a service promising to recover your funds. These are likely attempts to scam more money from you.
What if I am interested in investing in digital currency?
Reach out to your advisor first to discuss. We can help you assess an appropriate method of investing as well as watch for any red flags of potential fraud.
With highly volatile securities like digital currency or individual stocks, one should never invest more than one is willing to lose. We can help determine an appropriate amount of money for you to invest without putting strain on your overall financial plan.
Do your research and stick to established currencies that are time-tested. Bluestem does not include digital currencies in our investment philosophy, so we can not provide advice on specific options. But as a rule, we are wary of investments that are new to the market.
Understand the technology behind digital currency and evaluate the founders and developers who contribute to the currency’s operation. Also, select a safe storage for your digital currency whether it’s a hardware wallet or a trusted custodian.
References:
What To Know About Cryptocurrency and Scams | Consumer Advice