Scammers have easy access to cryptocurrencies due to their complexity and recent growth. BitPay recently discovered two new scams that exploit unsuspecting users. Learn how to protect yourself against scammers online.

BitPay is not a trading platform. It does not employ traders. BitPay does not have employees who sell cryptocurrency. BitPay employees won't reach out to you via email, social media or phone asking for your personal information. BitPay users can only buy cryptocurrency via the BitPay app. To do so, you must first go to the app and then use Simplex or Wyre.

These are the two main types we have identified as scams:

Testnet Scams: How to Identify Them

The bitcoin blockchain is known as livenetTestnet. It is a parallel network that is used only for testing. Our developers and testers need to test the app functionality and review the code. Because coins on livenet are monetary in nature, testnet coins have no monetary value while coins on testnet have. You can't use livenet coins in the testnet network and testnet coins in the livenet network.

Scammers use the testnet network to reach users by posing as an authorized cryptocurrency vendor or trader and offering a very lucrative deal that is often too good to be true. The scammer helps the user create a testnet wallet after they agree to buy the cryptocurrency. Once the testnet wallet has been created, the user will receive testnet coins. These coins have no monetary value.

After the testnet coins have been received in the user’s wallet, the vendor will tell the user that the testnet wallet must be activated and the coins converted in one of the following two scenarios:

The scammer usually tries to scam the user more than once: the scammer asks for payment to "convert" the funds, and then to "activate the funds."

Important to remember that testnet coins cannot be converted or activated between testnet and livenet wallets. These scams can be found with any cryptocurrency that is part of the testnet network. The most popular testnet scam involves Bitcoin.

Learn more about how you can protect yourself against testnet scams. Learn more.

Multisig Scams: How to Identify Them

Multisig wallets can be shared between two to six users, also known as "copayers". Before cryptocurrency transactions can be broadcast, they must be signed. The uniqueness of this wallet is that they may require more than one copayer to sign transactions, depending on the configuration. This provides more security. It can be used to scammers.

Let's imagine John and Paul are scammers. They have a multisig wallet with 3-2 copayers. This configuration means that the wallet has three copayers, and it requires two signatures in order to broadcast a transaction or move funds. John and Paul, the scammers, sell Bitcoin to Kristal (the victim of fraud) and invite her into their wallet. Kristal is invited to join the wallet. She can view funds John and Paul (the fraudsters) have sent to their multisig wallet. Kristal can't transfer funds to the multisig wallet and John and Paul (the fraudsters) cannot move them out of the wallet. John and Paul (the fraudsters) might ask for more money to unlock the funds or release them. John and Paul (the fraudsters) are copayers and will not have to release the funds.

Find out more about multisig wallets, scams, and how to avoid them.

How to protect yourself from scammers

Below is a list of suggestions to help you avoid getting scammed. These recommendations may not be able to protect you against all scams but they can help you get started.

Where can I buy cryptocurrency?

Never purchase cryptocurrency from an individual. Use a trusted exchange like Coinbase, Binance or OKEX. You can also purchase cryptocurrency using Simplex or Wyre through the BitPay app. There are many exchanges available. You should ensure that the exchange you select is licensed to operate in your country. In most cases, you will need to create an account and verify your identity before purchasing cryptocurrency from a trusted exchange. The transaction is transparent and traceable when you buy cryptocurrency from a licensed exchange. You can make payments through your bank account or credit card. This provides greater security and, in the event of fraud, you can contact them to file a claim.

How to determine if the cryptocurrency is legit

These are the key points to remember when you're thinking of buying cryptocurrency.

1. Regulations

Verify that the exchange/broker is compliant with applicable regulations.

2. Country

Certain countries have more stringent regulations than others. Financial institutions that are based in these countries tend to be more reliable.

3. Website

Review the website of any company selling cryptocurrency. These are some red flags that you should be aware of:

Investment opportunities

Fake brokers often offer incredible deals at unbelievable prices and high returns on investments. Like all assets, cryptocurrencies come with a risk. There is no guarantee that you will make any money. Brokers promising fixed gains of 20% per month or something similar are likely to be a scam.

BitPay strongly suggests that users only purchase cryptocurrency from trusted parties. Learn more about these assets before you get involved with complex technical assets.

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By: The BitPay Team
Title: Help Protect Yourself Against Scams
Sourced From: bitpay.com/blog/help-protect-yourself-against-scams/
Published Date: Wed, 29 Sep 2021 14:59:14 GMT