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Can you get scammed on Coinbase?

getting scammed on coinbase

January 28, 2021 | 

4470 Views | 

JOHN K MWANIKI | 

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Due to its volatile nature of the cryptocurrency market, the prices go up and come back down. As a result, many investors and other crypto enthusiasts often go on a rollercoaster ride. Yet, the success of bitcoin continues to gain multitudes of followers as time goes by.

Since its start, the security and privacy of cryptocurrencies have been a hot topic. On the one hand, it is quite challenging to hack due to its underlying blockchain technology. But, there exist varied security risks when trading bitcoin and other cryptocurrencies. So, a common question many investors and other interested individuals ask is, 'Can you get scammed on Coinbase?'

This article will look at how Coinbase works and if it is a safe alternative for cryptocurrency investors. We will also look at how to detect a crypto scam and some popular bitcoin scams in the cryptocurrency industry. 

Is it possible for you to be scammed on Coinbase?

Like cash transactions, bitcoin transactions are irreversible. Once you send the coins to the buyer/seller, there is no way they can return them to you. Thus, it is quite possible to get scammed on Coinbase as well as other exchange platforms.

In particular, Coinbase is one of the most popular and trusted exchange platforms in the world. It has over 40 different licenses to operate in about 30 U.S. states. As a result, it is as legit as it gets in the crypto industry. But, there are still ways that users can get scammed on the platform due to how it functions.

How does Coinbase work?

Coinbase allows both new and experienced bitcoin investors to trade and store their digital currencies. Many view it as an entry point into the crypto market.

Its unique and clean design offers its users an easy-to-use interface. As a result, they can easily navigate and find all the tools they need to buy and sell crypto. 

The platform also allows its users to use fiat currency to buy bitcoin. Unlike many traditional exchanges, you can use any fiat currency to buy Bitcoin, Litecoin, Ether, or BTC. Coinbase also allows its users to use several payment options. Some of them include PayPal, SEPA transfers, Bank transfers, and debit/credit cards.

How do you buy/sell bitcoin and other cryptocurrencies on Coinbase?

To use Coinbase, you need to create an account and verify your identity. The platform does not entertain anonymous traders as it has strict Know Your Customers (KYC) rules and regulations. Thus, you will need to provide a picture of your driving license, source of funds, information about your employer, and your social security number. But, the information required depends on your locality and its laws. 

The next step is setting up a digital wallet. This involves linking your bank account or credit/debit card to the platform. Various banks and other payment platforms charge varied fees for making such deposits. So, investors must first consult their banks on the costs associated with each payment option. 

After setting up an account and a digital Coinbase wallet, you can now buy and sell bitcoin and other cryptocurrencies. The platform offers its users various ways to invest and place orders. There are market and limit orders, stop-loss orders, take-profit limit, and stop-limit orders. Coinbase also has many ways to help users create recurring investments, enabling them to Dollar-cost average them. 

But, users should also beware of the possibility of getting scammed on Coinbase. This is most possible when transacting with other traders on the platform. For instance, when a buyer sends bitcoin to a blockchain address, there is no way to reverse that transaction. Thus, it is vital to find out the identity of third-party merchants and services on the platform. Only transact with those you trust and show reliability. So, let us discuss some popular scams on Coinbase.

Common cryptocurrency scams on Coinbase

1. Giveaway scams

Some scammers and fraudsters use various social media platforms to deceive investors. They use posts from screenshots of forged messages from executives and companies promoting the fake giveaway. There are also links associated with fraudulent websites and fake accounts. These fake links will often seek address verification through sending crypto to the scam giveaway.

It is crucial to note that Coinbase will never need you to send cryptocurrency to an external address. The platform also does not engage in any giveaways.

2. Impersonation and technical support scams

Another common way to get scammed on Coinbase is through fraudsters setting up fake phone support lines. Most of these numbers are spammed on the internet, which potentially lures unsuspecting victims. These scammers can also make outbound calls to potential victims. In turn, they manipulate and deceive them into providing personal information, which is then used for fraudulent transactions

As a general rule of thumb, investors should never share access to their machine with anyone. They should also never give out any sensitive authentic credentials to any Coinbase support staff

3. Phishing

Coinbase users should always ensure they avoid phishing sites. These are malicious websites that deceive visitors by mimicking an authentic site. As a result, these visitors enter their sensitive information and login credentials into the site for fraudulent purposes. 

You can find these sites on various platforms, including emails, text messages, search engine advertisements, and different social media platforms. Always ensure that you access Coinbase directly to avoid such phishing sites.

4. Investment scams

In this case, the fraudsters and scammers want you to invest large sums of money for higher returns without any financial risk. They will also ask you to lure in more people to make the same investment as this is how they make their earnings. Such pyramid and Ponzi schemes are very common around the world.

Always be careful of investments that sound too good to be true because they often are not. Research organizations thoroughly before you invest. Also, watch out for spelling and grammar mistakes as scammers often overlook them when communicating.

5. Employment scams

Another popular way to get scammed on Coinbase is through fake job offers. Scammers often impersonate job recruiters to steal personal information and cryptocurrency from job hunters. Once individuals post their resumes online, these fraudsters seek payment to begin some form of training. Coinbase users should always ensure they are communicating with Coinbase recruiters with @coinbase.com email addresses.

Conclusion

Owing to bitcoin and other cryptocurrencies' success, investors have to be careful of the increasing number of scammers and con artists. Unfortunately, it is easy to get scammed on Coinbase. 

If you fall for the scams mentioned above or any other, it is difficult 
to recover your funds. It is best to report it to the Federal Trade Commission, eConsumer, or FBI IC3 to prevent other individuals from falling prey to the same scam. You can also use various social media platforms to report such scams. 

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