Guarding ‘Uptober’ crypto gains and avoiding scams in the holiday season

Trust your instincts and be sceptical of offers that seem too good to be true, says crypto exchange Kraken
Move slowly and verify before trusting any unsolicited communication
Understand your emotions; scammers exploit fear, greed, and urgency to manipulate you

Special Report: The crypto space is full of opportunities but also no shortage of bad actors seeking to take advantage of the less vigilant. Kraken, however, has tips to help you navigate the sector safely.

October, often playfully dubbed “Uptober” in the crypto community, has historically been a month of positive price movements for major cryptocurrencies. This year is no exception, with appreciation in assets like Bitcoin (up ~6%) and Ethereum (up ~11%) capturing the attention of both seasoned investors and newcomers alike.

Positive price action naturally correlates to enhanced interest in the crypto space, and given we are entering the holiday season, we often see people looking to invest or gift digital assets.

This convergence of rising markets and holiday enthusiasm also creates a perfect storm for scammers. That’s why now, more than ever, it’s crucial to talk about security in the crypto space.

The role of social engineering

Most “crypto scams” aren’t sophisticated technical hacks or complex investment schemes; rather, they’re about exploiting human emotions and behaviours. Scams are as old as money itself – and malicious actors have adapted time-honoured tactics to better target crypto investors.

Scammers targeting crypto investors may try to trick victims into sharing their seed phrases – the private keys to their non-custodial wallets – under various pretences. Remember, no legitimate entity will ever ask for your seed phrase or passwords. If someone does, it’s almost certainly a scammer.

At the heart of most scams is the psychological manipulation of individuals into performing compromising actions or divulging confidential information. Scammers often invest considerable time and effort into gaining the trust of their victims.

This method, sometimes referred to as “pig butchering”, involves “fattening up” the target over days, weeks, or even months with flattery and feigned personal interest.

Once trust is established, the scammer strikes, persuading the victim to transfer significant assets. For example, a scammer may hear a dog barking in the background while on a phone call and ask about the breed of the dog. This is to establish connection and trust that can be leveraged later in the fraud.

Scammers know that during periods of market excitement and holiday generosity, individuals may lower their guard. The best thing you can do to guard yourself against scams is to remain vigilant and to understand how scammers work.

Common scam tactics targeting retail investors

Unsolicited investment opportunities: Just as boiler room stock scams like in The Wolf of Wall Street have duped investors for decades, similar tactics are employed in the crypto space.

If someone contacts you out of the blue, whether over the phone or through social media, with a “can’t miss” investment opportunity promising any kind of returns, be wary. Legitimate opportunities, especially those with guaranteed returns, rarely come knocking uninvited.

Urgent requests and high-pressure tactics: Scammers often create a false sense of urgency. They might impersonate a frightened family member needing immediate financial help or claim there’s an issue with your crypto account that requires prompt action.

This pressure is designed to cloud your judgement and prompt hasty decision-making, in the hopes that you may make a mistake.

Phishing and fake websites: With advancements in technology, scammers can convincingly impersonate legitimate websites. These fake sites may appear high in search results or be linked in emails and texts.

Always double-check URLs and avoid clicking on unsolicited links. When in doubt, type the website address directly into your browser and scroll through sponsored links that appear at the top of search engines.

Six tips to protect yourself, your data and your assets

Trust your instincts: Be sceptical of offers that sound too good to be true. If someone guarantees success or pressures you to act immediately, it’s a major red flag.
Verify before trusting: Don’t assume someone is who they claim to be. With the rise of AI and deepfake technology, it’s increasingly challenging to distinguish genuine communications from fraudulent ones. If you receive an unsolicited call or message, ask for identification and always verify their credentials through official channels yourself. If in doubt, hang up and contact the organisation through another means of communication.
Understand your emotions: Be aware of your emotional state. If you feel pressured or rushed, step back, take a few minutes and reassess the situation.
Keep personal information private: Be cautious about the information you share publicly, especially on social media. Scammers can use personal details to gain your trust or guess passwords.
Protect your credentials: Never share your passwords, PINs, or seed phrases. Use unique, strong passwords generated by reputable password managers and enable two-factor authentication where possible.
Avoid engaging with unsolicited contacts: Don’t reply to unexpected emails or texts, even to unsubscribe. Engaging can confirm to scammers that your contact details are active.

Remember, doing nothing when confronted with suspicious requests is a valid and often effective response. Take the time to verify information independently, and don’t let anyone rush or pressure you into making decisions.

The world of crypto offers exciting opportunities for investors, but it’s crucial to navigate it with caution and awareness. By staying vigilant and following these guidelines, you can protect yourself from over 90% of all types of scams, and ensure your crypto investments remains yours.

This article was developed in collaboration with Kraken, a Stockhead advertiser at the time of publishing, and was written by Kraken managing director for Australia and rest of world Jonathon Miller.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.