Cryptocurrency Scams in Kenya: How to Identify and Avoid Them

"I still drive my Ferrari, and some of you can't afford to eat." These were the words of Bitstream Circle’s mastermind.

Bitstream is one of the many cryptocurrency scams in Kenya that fleeced its investors Sh1 billion in 2021.

Before we dive in on how to identify and avoid crypto scams,

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See the post on my website here: Cryptocurrency Scams in Kenya: How to Identify and Avoid Them

Moving on,

Kenya has witnessed an alarming surge in cryptocurrency scams, leaving countless Kenyan investors defrauded of their hard-earned money.

This guide will teach you how to identify and avoid cryptocurrency scams in Kenya.

Let's dive right in!

What Are Crypto Scams?

Crypto scams are deceptive schemes in the world of digital currencies. This mostly involves someone promising you quick riches or a too-good-to-be-true investment opportunity in cryptocurrency.

That's often the red flag of a crypto scam!

These scams come in various forms, from fake ICOs and pump-and-dump schemes to Ponzi schemes and phishing attacks. The goal is to trick you into sending your hard-earned money to scammers.

In essence, crypto scammers prey on the excitement and curiosity surrounding cryptocurrencies, luring unsuspecting victims with promises of quick riches and then disappearing into the digital shadows.

Therefore, if you are new to crypto trading and investing, you need first to invest in education so you understand the fundamentals and technicalities before putting your money.

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Types of Cryptocurrency Scams in Kenya

Crypto scams in Kenya come in all shapes and sizes, but they all have one thing in common: they aim to take your hard-earned money. Let's break down some of the most common types you need to watch out for:

1. Bitcoin and Crypto Investment Scams

These scams start with an unexpected invitation to invest in cryptocurrencies. They lure you to a fake website, promising quick riches.

They may even throw in fake testimonials from famous people. But once you invest, the promises vanish, and your money disappears. Think of them as modern-day pyramid/Ponzi schemes.

2. Impersonation or Imposter Crypto Scams

Scammers pretend to be trustworthy sources, like employers offering crypto-related jobs or even well-known companies.

They'll contact you through various means, claiming there's a crisis that can only be solved by buying cryptocurrency and sending it to them. Don't fall for it; it's all a con.

3. Romance Scams

These scammers lurk on dating apps, forming digital connections and convincing victims to invest in cryptocurrency.

In reality, it's a ploy to steal your money. Love might be blind, but don't let it make you blind to scams!

4. Crypto Schemes

New cryptocurrencies often raise funds through Initial Coin Offerings (ICOs). However, some use ICOs to scam people by promising unbelievable profits.

They pressure you to invest more and then pull off a "pump and dump" scheme, artificially inflating the currency's value and then cashing out.

5. Phishing Scams

Phishing isn't just about fake emails anymore. Scammers send malicious messages, trying to trick you into revealing your crypto wallet information.

Remember, in the crypto world, your private key is like gold, so protect it!

6. Social Media Cryptocurrency Scams

Scammers are all over Instagram, Facebook, and other social platforms, claiming to give away Bitcoin. They post fake screenshots from famous people like Elon Musk to appear legit.

But once you send them Bitcoin for "verification," you'll never see that giveaway. It's a one-way street to disappointment.

Top Cryptocurrency Scams in Kenya

According to data from Kenya’s ICT Ministry, the year 2022 was particularly distressing, as Kenyans lost a staggering Sh13 billion to various crypto scams, including Temcoin, E-Ken, CG, IPC, SU, Novatech, StackCoin, My Royal Q, and Bitfluxminers.

These scams have not only caused financial ruin for many Kenyan families but have also tarnished the reputation of the burgeoning cryptocurrency market in the country.

In 2019, over 11,000 Kenyans fell victim to the Nurucoin Ponzi scheme, losing a total of Sh2.7 billion. The founder, a pastor, exploited his congregation to market Nurucoin as a top investment opportunity, deceiving countless individuals in the process.

Additionally, the emergence of MetaForce in 2022 has added to the growing concern. Labeled a textbook pyramid and Ponzi scheme by the U.S. Securities and Exchange Commission (SEC), MetaForce was created by Lado Okotnikov, the mastermind behind the notorious Forsage smart contract-based pyramid scam.

Despite the failure of Forsage, MetaForce has since gained momentum in developing countries, including Kenya, perpetuating the cycle of fraud and deception.

How to Identify Cryptocurrency Scams

Identifying cryptocurrency scams is straightforward when you know what to watch out for. Legitimate crypto projects provide open and transparent information, including details about their blockchain and associated tokens.

i. Excessive Marketing

If a crypto project bombards you with marketing, such as paid influencers, online ads, and more, it's a red flag. Scammers use aggressive marketing to lure victims quickly.

If it seems too good to be true or makes extravagant promises without evidence, take a step back and conduct background checks before considering an investment.

ii. Lack of a Whitepaper

A whitepaper is a fundamental part of any initial coin offering (ICO). Every cryptocurrency project should have one.

This document outlines the coin's functionality and architecture. If you can't find a whitepaper or it doesn't make sense, exercise caution.

iii. Promised Returns

Beware of any cryptocurrency project that guarantees future profits. In the world of finance, no investment can guarantee returns since values can both rise and fall.

So, if a cryptocurrency deal promises guaranteed profits, it's a warning sign.

iv. Anonymous Team

Trustworthy investment projects should introduce their key team members. This typically includes accessible biographies of those managing the investment, along with an active social media presence.

You can access their socials or websites from crypto exchanges or data platforms like CoinGecko or CoinMarketCap. On CoinMarketCap, you can do so by navigating to the left side panel as shown below:

If you can't identify the people behind a cryptocurrency, be cautious.

By staying alert to these signs, you can protect yourself from falling victim to crypto scams and make more informed investment decisions.

How to Avoid Cryptocurrency Scams in Kenya

Here are some simple steps to steer clear of cryptocurrency scams:

1. Check Website Addresses

Before sending money or sensitive info, make sure the website's domain name or social media account is legit. Watch out for spelling mistakes and look for account validation.

2. Guard Your Personal Info

Even if dealing with a trustworthy crypto service, play it safe and avoid sharing personal or banking details. Only provide this info when necessary for a legitimate transaction.

3. Beware of Social Media Ads

Scammers love using social media to promote their schemes. They might use fake celebrity endorsements or promise freebies. Stay skeptical and do your homework when you see crypto offers on social media.

4. Don't Rush into Investments

Scammers use pressure tactics, like time-limited discounts or bonuses, to rush you into investing. Take your time, research thoroughly, and don't be rushed.

Related Articles:

• How to Identify Cryptocurrencies to Buy in Kenya
• How to Trade Cryptocurrency in Kenya
• Top Cryptocurrency Traders in Kenya

5. Invest in What You Understand

If a cryptocurrency seems too complicated or you don't get how it works, hold off on investing. Learn more about it first.

6. Do Your Homework

Not all cryptocurrencies are scams. If you come across an unfamiliar one, do some digging. Read the whitepaper, find out who's behind it, and search for honest reviews. Use a reliable source to check for known fake cryptocurrencies.

By following these simple steps, you'll be better equipped to avoid falling victim to crypto scams and protect your hard-earned money.

FAQs for Cryptocurrency Scams in Kenya

How do you deal with crypto scams?

Dealing with crypto scams involves taking preventive measures and, if you fall victim, reporting the scam to relevant authorities. To prevent scams, stay informed, verify information, and use trusted platforms. If you encounter a scam, report it to the appropriate authorities and seek legal advice if necessary.

How do you avoid crypto scams?

Avoiding crypto scams involves being cautious and conducting due diligence. Double-check website addresses, never share sensitive information, be skeptical of high-pressure tactics, and only invest in what you understand. Staying informed about common scam types is also crucial.

What are the biggest four common cryptocurrency scams?

The four common cryptocurrency scams include Ponzi schemes, phishing attacks, fake exchanges, and initial coin offering (ICO) scams. These scams often involve promises of high returns, fake websites, and deceptive marketing tactics.

Can I get my money back from scammer crypto?

Recovering funds from a crypto scam can be difficult. It depends on the circumstances, jurisdiction, and whether the scammer can be identified and pursued legally. Consult law enforcement or legal professionals for guidance.

Can a crypto scammer be traced?

Crypto scammers can be challenging to trace due to the anonymity of cryptocurrencies. However, law enforcement agencies and cybersecurity experts may employ various techniques to track and apprehend scammers, especially if they leave digital traces.

How can you tell if someone is a crypto scammer?

Be cautious if someone promises guaranteed high returns, asks for personal or financial information, uses unsolicited communication, or employs pressure tactics. Additionally, research their background, verify their claims, and use trusted platforms for transactions.

What are the red flags for crypto scams?

Red flags for crypto scams include unrealistically high returns, unsolicited offers, requests for personal information or cryptocurrency transfers, lack of transparent information about the project or investment, and high-pressure tactics.

What can I do if I get scammed on crypto?

If you're scammed in crypto, report the incident to law enforcement and relevant regulatory agencies. Preserve evidence, document all interactions, and seek legal advice if necessary. While recovery is challenging, taking swift action increases the chances of addressing the issue.