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Crypto scams are running amok to steal your coins — how to protect yourself

Cryptocurrency
(Image credit: Snappa)

Cryptocurrency scams and phishing attacks are getting out of hand. Malicious actors are masquerading as representatives of trusted cryptocurrency apps such as Atomic Wallet and Trust Wallet, and phishing for users' private keys and other personal information to steal cryptocurrency.

The most recent crypto scam to make national headlines led to $2 million in losses. According to the FTC, perpetrators pretended to be Tesla CEO Elon Musk and urged unsuspecting victims to send their cryptocurrencies to a wallet. They were given false promises that their digital assets would grow exponentially. Unfortunately, the scammer zipped away with the victims' digital assets.

Crypto scams on Twitter: Fraudulent help forms and AirDrops

Celebrity impersonations aren't the only way crypto scammers steal victims' digital assets. I've spotted a handful of alarming and disquieting scams spreading like wildfire across the internet.

Under several tweets asking for guidance on how to complete altcoin transactions, scammers replied with links to bogus help forms that look like they're from trusted, popular cryptocurrency apps such as Atomic Wallet and Trust Wallet.

Cryptocurrency phishing

Cryptocurrency phishing (Image credit: Future)

The forms look innocuous at first, prompting users to input their email addresses and customer-support queries, but at the bottom of these forms, there is usually a request for personal information that cryptocurrency holders should never share with others. 

cryptocurrency scam

cryptocurrency scam (Image credit: Future)

In the case of this deceptive Trust Wallet form, the scammers asked for users' 12-word seed phrase, a set of unique words provided to all Trust Wallet users in case they forget their passwords. This 12-word seed phrase is also used to get the private keys to one's digital assets. If a cryptocurrency scammer gets a hold of this, say bye-bye to all of your coins and tokens.

I spotted a similar bogus form that was created to fool users into thinking they are requesting help from Atomic Wallet.

Cryptocurrency scams

Cryptocurrency scams (Image credit: Future)

Early this month, AtomicWallet tweeted that it has seen an increase in scams and phishing attacks. "Kindly be advised that our only official Twitter account is, website– http://atomicwallet.io, email – support@atomicwallet.io. The rest is SCAM," the cryptocurrency company said.

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Finally, I've seen many airdrop scams. When founders launch a new cryptocurrency, many people offer to give away a nice chunk of their token supply as a marketing ploy. This is called an airdrop. Some airdrops are legitimate. Authentic airdrops will only ask for our public wallet address, which can be shared with others.

Fraudulent airdrops, however, will ask you to give up your private keys. A private key is an encrypted alphanumeric code — a string of letters and numbers — that permits access to your cryptocurrency holdings. Of course, airdrops don't require such personal information; all the founders need is your public wallet address.

Once you give up this sensitive information to scammers, whether it's your private keys or your seed phrase, your account will be wiped and you won't be able to recover any of your assets.

How to protect yourself from cryptocurrency scams

It goes without saying that you should never, ever — not even if there's a fire — give up your seed phrase or private keys. Most cryptocurrency apps warn first-time users that they should write down and safeguard their seed phrase because if they lose it, they won't be able to recover it.

"DO NOT share this phrase with anyone! These words can be used to steal all your accounts. You can't edit/change your Seed Phrase / Secret Recovery Phrase," Metamask, a crypto wallet, warned on its support page.

Secondly, if you're a cryptocurrency holder, it's in your best interest to take your digital assets off online exchanges and transfer them into a hardware wallet like Ledger Nano S, a USB device that stores your precious digital assets. If Atomic Wallet, Coinbase or Metamask gets hacked, you won't fret because all of your cryptocurrencies are stored away in a safe hardware wallet.

This all may seem like common sense, but according to the FTC, it has received 7,000 crypto scam reports in the last quarter of 2020 and the first quarter of 2021, so be sure to keep your wits about you.

Kimberly Gedeon, holding a Master's degree in International Journalism, launched her career as a journalist for MadameNoire's business beat in 2013. She loved translating stuffy stories about the economy, personal finance and investing into digestible, easy-to-understand, entertaining stories for young women of color. During her time on the business beat, she discovered her passion for tech as she dove into articles about tech entrepreneurship, the Consumer Electronics Show (CES) and the latest tablets. After eight years of freelancing, dabbling in a myriad of beats, she's finally found a home at Laptop Mag that accepts her as the crypto-addicted, virtual reality-loving, investing-focused, tech-fascinated nerd she is. Woot!