Ethereum is the world's largest smart contract platform. Countless decentralized applications, also called dApps, are based on it. The fact that a digital business cycle has emerged based on Ethereum, which has created a billion-dollar market, also attracts scammers. They supposedly profit from the anonymity of the cryptocurrency and pull money out of the pockets of unsuspecting investors.
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If you have become a victim of an Ethereum scam, then in this article we will show you how to get your money back. We will also show you what means help to protect yourself from an Ethereum scam.
How does Ethereum scam work?
From a perpetrator's perspective, using Ethereum has several advantages. Similar to Bitcoin, it can be used to conduct international transactions, allowing fraudsters to target their victims in different countries and interest groups. Additionally, the revenue they make is extremely liquid, so captured Ether can be converted into U.S. dollars, euros, or another currency in short order.
As for the actual scams, Ethereum offers rich opportunities for scammers due to its smart contracts:
- NFT scam: This involves mimicking famous NFT collections or creating artificial hype for worthless NFTs. Read our article on NFT scams to learn more about the topic.
- Fake tokens: an almost identical method is "counterfeiting" tokens. Therefore, tokens are put into circulation that is suitable to be mistaken for real crypto assets. However, these are not NFTs, but mostly tokens based on the so-called ERC-20 standard.
- ICO fraud: This is a form of investment fraud. A token sale is advertised where investors can purchase tokens before the market launch. In this case, a certain return is usually promised as well, but in the end, the scammers disappear with the collected funds.
- Giveaway scam: This scam is not limited to Ethereum, but it is also applied here. It is pretended that Ethereum is being given away, but first, an upfront payment is required to participate. To do this, perpetrators hack or mimic the social media profiles of celebrities and companies to exude legitimacy.
- Airdrop scams: Perpetrators send unsolicited tokens to their victims' Ethereum addresses. At the same time, they set up fraudulent websites. If the victims try to find out about the supposed airdrop there, different tricks are used to try to get their crypto assets.
Please note that this list does not cover all methods, but only the most popular ones. Moreover, the scammers keep changing their approach, and thus, variations of the methods described here may emerge. Moreover, part of these methods requires the active trading of the scammed person, because he is eventually tricked into sending the funds voluntarily.
How can you protect yourself from Ethereum scams?
Based on the methods described above, it quickly becomes clear that the best protection is established by careful research and attentive handling of any kind of offer. Specifically, NFT fraud and also fake token fraud can be prevented by matching the smart contract address. The addresses from the real projects can be found on CoinGecko or CoinMarketCap, for example. If it shows up on a block explorer like Etherscan that it is not the same address, then the scam is already busted.
In the case of airdrop and giveaway scams, the only thing that helps is to check if it is a real gift. Because there are occasions when it is. However, as soon as it comes to making an upfront payment, the case is clear. Extreme caution is also required with unsolicited airdrops. This is because, for the most part, legitimate airdrops are not sent unsolicited, but must be actively collected via a claim function.
Last but not least, there is ICO fraud and here the picture is similar to all other forms of investment fraud. Investors should thoroughly check the promises made before investing in funds or crypto assets. Unrealistic returns are also a warning sign, as are anonymous developer teams. Ultimately, you can only identify an ICO scam if you have a certain level of experience. When in doubt, it is better to forgo an investment than to bet on an investment that you do not fully understand. In addition, one should not be pushed by any brokers or other recruitment attempts. Moreover, such contacts are rather unusual and therefore also a clear warning signal.
I have fallen victim to an Ethereum scam, how do I get my money back?
No matter what form of fraud you have fallen victim to, the damage is often great and those affected are not infrequently at a loss as to how to deal with it. Although Ethereum transactions offer a certain degree of protection and the parties involved cannot be identified right away, blockchain forensics can, however, be used to draw important conclusions about the perpetrators and even identify them completely.
This is done by analyzing the transactions between the victim and the perpetrator and then following the trail that the fraudsters inevitably leave behind. Blockchain technology, after all, does not offer anonymity per se, and only a few cryptocurrencies cannot be tracked. Ethereum is not one of them in any case, which is why those affected should take the reins and contact a professional investigator for this purpose.
Crypto-Tracing can pick up and document the trail of the perpetrators. This is sometimes invaluable in a police investigation. After all, in international comparison, there are differences in the expertise of individual investigative agencies when it comes to blockchain technology. We also arrange contact with expert lawyers who represent victims in court, before authorities, and also third parties. After all, if the perpetrators use their victims' money to use service providers in the financial industry, then these must sometimes act in the interests of the defrauded and secure funds. Crypto-Tracing also supports its clients in this regard.
Have you been a victim of Ethereum fraud or do you feel you have been scammed? Do not hesitate and contact us today and tell us about your case. We will get in touch with you promptly and discuss with you how best to proceed.