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17 July 2023 | Podcasts | Article by Roman Kubiak TEP

Lawyers on the Block | Crypto Scams


Lawyers on the Block | Crypto Scams Lawyers on the Block | Crypto Scams Lawyers on the Block | Crypto Scams

Crypto scams are unfortunately common in the cryptocurrency space. While it’s important to note that not all cryptocurrencies or crypto-related projects are scams, there have been instances of fraudulent activities in recent years.

In this episode of Lawyers on the Block, Roman Kubiak and Kieran Forsyth from the Contested Wills, Trusts and Estates team look at how scammers are able to steal your cryptocurrencies, the types of scams out there, including the Alfa-Crypx / Alpha-Crypx scam, and, crucially, what can you do if you have been a victim of a crypto scam.

Listed below are some other common types of crypto scams to look out for:

 

Ponzi Schemes

Ponzi schemes guarantee large returns on investment to early investors by using funds from later investors. Eventually, the scheme collapses when there are not enough new investors to sustain the payouts.

Multi-Level Marketing (MLM) Schemes

Some MLM schemes use cryptocurrencies as their product, promising high returns for recruiting others into the scheme. These schemes often focus more on recruitment than on legitimate product or service offerings.

Fake Initial Coin Offerings (ICOs)

Scammers create fake ICOs, mimicking legitimate projects, and convince people to invest in their tokens. Once they have raised funds, they disappear, leaving investors with worthless tokens.

Malware and Ransomware

Hackers distribute malicious software that can compromise users’ computers or mobile devices. They may gain control over wallets and demand ransom in exchange for releasing the funds.

Pump and Dump Schemes

Scammers artificially inflate the price of a low-volume cryptocurrency by spreading false information or rumors. Once the price rises, they sell their holdings, causing the price to crash and resulting in significant losses for unsuspecting investors.

Phishing Scams

Scammers create fake websites or send fraudulent emails that mimic popular cryptocurrency exchanges or wallets. They trick users into sharing their login credentials or private keys, allowing scammers to gain unauthorized access to their funds.

Fake Wallets and Exchanges

Scammers create fraudulent cryptocurrency wallets or exchanges that appear legitimate. Users deposit their funds but are unable to withdraw them later.

 

It’s crucial to exercise caution and conduct thorough research before investing in any cryptocurrency or participating in crypto-related activities. Always verify the credibility of projects, double-check URLs, and use secure and reputable platforms. Additionally you should stay informed about the latest security practices to protect your digital assets.

Ask a Crypto lawyer

Each episode of the podcast includes a segment where subscribers like you can submit their crypto law questions. If you would like your question answered on a future episode of the podcast, get in touch with our specialist crypto lawyers.

Author bio

Roman Kubiak is a partner and head of the market leading Contested Wills, Trusts and Estates team.

He advises across the whole spectrum of private wealth disputes, with a particular focus on high value, complex and cross-border disputes including: trust disputes, breach of trust claims and applications to remove trustees; will disputes, particularly those with an international element; claims under the Inheritance (Provision for Family and Dependants) Act 1975; and claims for equitable relief under proprietary estoppel, constructive trusts and resulting trusts.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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