About Crypto Thefts
Crypto assets have rapidly gained popularity over the last few years. Crypto assets are blockchain-driven technology with billions invested in this industry. The meteoric rise in popularity is primarily attributed to crypto-assets offering good returns while eliminating the third party and convenience charges of intermediaries like banks.
However, it’s being exposed to risks of volatility. The highly volatile nature of the crypto market is not the only risk that investors are exposed to. Crypto thefts have been picking pace, almost multiplying five-folds between 2020 and 2021. The most recent crypto theft amounting to $326 million was the second biggest crypto theft.
It becomes imperative for investors to understand how these crypto thefts are committed and how they can spot a crypto theft and protect their investments.
How are Crypto Thefts committed?
Crypto can be exposed to direct theft or scams. Let us explore the various kinds of ways in which crypto thefts or scams can be committed:
Crypto Thefts From Exchanges
While creating a wallet is a safe way of storing crypto and should protect you from crypto thefts, most exchanges hold the primary key that accesses the investors’ crypto even when it is stored in the custodial wallet belonging to the investor. Much like a bank, these digital exchanges can be a victim of theft. Smart contracts ensure security, but hackers could breach the security and steal the cryptocurrencies from the exchange. Hence it’s very important to choose the exchange with high-security standards. ZebPay is one of the safest crypto exchanges with incident-free handling of crypto assets to date.
In this method, the scammer asks for personal details like login credentials and they use this input to steal crypto investments. The emails are drafted in such a way that it evokes an instant reaction from the investor. For example, the scammer could offer rewards against deposits claiming that the investor has won a jackpot.
Investment scams are of many kinds. Scammers often portray a very lucrative investment deal that could ride on the success of a real business or be entirely made up. Using well-thought-out tools like social media platforms and fake endorsements, the investment deal is made to look natural to gain investors’ trust at first glance. However, once the deposits are made, the investors lose their crypto investments by not being able to withdraw them or pay hefty fees for the same.
The fine lines in the underlying smart contracts become important to decipher before making investments.
Through fake profiles on dating apps, scammers may ask to borrow funds from the people they match with. They could also promise high returns on investments and lead the victim toward one of the other scams.
By understanding the kinds of crypto investments, investors can try to spot crypto theft or scams before getting trapped in them. However, apart from being careful, investors must opt for other ways of protecting their crypto investments.
How To Spot Crypto Theft and Protect Your Crypto Investments
The thumb rule to spot crypto theft is to look out for red flags in intelligent contracts. Ensure you or someone with the proper knowledge has verified the contents of the smart contracts before you choose to invest.
Another integral way to spot crypto theft is to ensure that you do not fall prey to someone explicitly asking you to make payments using cryptos, a wire transfer, gift card, or by directly sending tokens. There is almost no way to recover crypto that you send to someone, so scammers use this approach.
Apart from always being on the lookout to spot crypto theft, here are some strategies you can adopt to protect your crypto investments from unforeseen attacks.
Storing crypto assets in USB drives, become safer, thereby eliminating attacks on exchanges. Investors should opt for a hybrid strategy to distribute their investments across wallets. However, investors must be cautious not to lose the physical USB drive as there would be no other way to recover the tokens stored in it if it is lost.
Always use different passwords for different platforms and store the passwords in a secure environment without revealing them to anyone. Opt for multiple verification factors to make it difficult for anyone else to access your account.
Never enter a transaction from a platform that is not trustworthy and does not have the requisite experience backing it. This will help you to largely avoid crypto exchange thefts. Route all your crypto transactions through the most trusted crypto exchanges, wallets, or apps. Do your research before making any form of investment.
A new financial instrument always works as an open ground to be exploited for the right and wrong reasons. Individual investors will have to practice vigilance with their crypto investments to avoid crypto thefts.
Always opt for safe crypto exchanges like ZebPay and stay tuned to our knowledge base to learn more about how to keep your crypto investments safe.