Cryptocurrency Scams Overview & How to Avoid!
The regulation of crypto coins remains a grey zone in most jurisdictions as of press date. This has resulted to the loss of digital currencies via Coin exchange platforms which may be hacked. Despite the efforts to operate with a high level of ethics, client funds are not insured in case anything goes wrong even with the top tier crypto exchanges.
A good number of developers in the blockchain & crypto space have tried to address this issue. Digital asset wallet creators have inquired for feedback to improve the experience of crypto users in security & platform efficiency.
Cryptocurrency exchanges recently started to take measures to increase their trustworthiness. Amongst the most popular to make an initiative was Binance; the firm intends to be sharing all its financial information in publications going forward.
The crypto scam menace can be dealt with better at with an individual’s approach to the market. Crypto investors need to implement more resources in identification of altcoin portfolios to invest in. Basically, the market players ought to learn how to avoid scammers within the cryptocurrency arena.
As it stands, there has been evidently 3 types of scams used by the malicious crypto players. They include; Telegram impersonations, counterfeit Initial Coin Offerings & Pump & dump projects.
Pump & Dump Cryptocurrency Schemes
This scamming approach has been common within the crypto markets & gained popularity in 2017 & 2018 when the markets new entry levels were skyrocketing. Scammers inflate a cryptocurrency project’s value as a way of attracting investors in a “hot” digital currency. However, they bail out once the prices start climbing to their peak potential & leave the cryptopreneurs speculating for better prospects while they dump the project.
Victims of such projects often join the scam based on information they have somehow gathered. Most of the time this information entice them with lucrative prospects were they to take a position in the pump & dump project. In such a scenario, crypto experts have often recommended that the community is safer sticking with coins they have fundamental knowledge & other logistical facts about the future.
Fake Initial Coin Offerings (ICOs)
The scammers using fake tokens operate almost similar to pump & dump projects. Ideally, a team creates the fake crypto coins which they try to sell to investors by working on overview aspects like whitepapers. Using these documents, the scammers will sell a “cash cow” to investors while in truth their speculated targets are unrealistic. A good number of scamming whitepapers will often display inaccuracy starting with the grammar & other content that may probably be stolen.
Other methods include the creation of counterfeit smart contracts. The developers of these target innocent exchanges which will likely list their fake digital assets. This plan is kept solid through volume generation by the token scammers in order for their products to be priced. It is then that they sell these counterfeit products to unsuspecting investors for dumping prices.
Crypto users can evade such scenarios by doing proper background checks on the platforms a digital currency is listed. Normally, it’s safer to transact a coin which is listed in regulated or reputable crypto exchanges to avoid being scammed.
The growing crypto community & its many sub-forms have become a hub for some malicious individuals. Fake ICOs & other crypto start-ups have established an online presence in platforms like Telegram where they con people. One can easily be convinced by a telegram impersonator to fund their project while all its fundamentals from the whitepaper appear shady.
Particularly, the frauds will copy the identity of prominent cryptocurrency projects & figures. This is simply achieved by altering an accounts outlook; new market entrants often fall victim to such. Their goal is to scam off participants through reward promises for instant fund contributors. Crypto users can avoid the hassle that comes with such scams by simple background checks. One needs to be keen with telegram account information & try to authenticate its legitimacy by verifying the news posted with other official platforms of the cryptocurrency project.