The rapid and robust development of the Crypto market has provided opportunities for many investors to generate additional income and profits based on their individual strategies. However, due to the market’s anonymous nature and lack of control and management by third parties. Many new investors have experienced losses as a result of falling victim to fraudulent schemes. Therefore, we invite you to refer to the following article to learn ways to protect against Scams while investing in Crypto.
The general risks and consequential outcomes associated with various forms of Scam are being addressed
Thanks to the strengths of Blockchain and Smart Contracts, users are now able to conduct fast transactions across diverse locations, with the trust and assurance brought about by the internet. This unique characteristic has propelled the rapid growth of the Crypto market, as evidenced by large investment volumes and significant potential for future development.
However, if you lack experience and are not familiar with various forms of scams in the Crypto world, there is a high possibility of falling into traps. In this situation, you may face severe risks such as loss of personal information, loss of personal account, and complete asset loss, which cannot be recovered easily. To identify and prevent scams effectively, refer to the detailed guidelines provided below.
Some common forms of Scam
Project Fake ICOs
As is commonly understood, ICO stands for Initial Coin Offering, which involves the initial issuance of a coin at a relatively low price. This represents an excellent investment opportunity for investors, as the value of the coin can increase significantly if the project shows potential, leading to substantial returns on the initial investment.
However, many individuals and organizations have capitalized on this characteristic to create fraudulent ICOs by inflating inaccurate project information. This aims to attract inexperienced investors who may not be able to accurately discern potentially viable projects. Consequently, once a certain amount of funding is raised, everything automatically becomes “out of sight,” including the investor’s invested funds. A distinguishing characteristic of these projects is the inclusion of excessively perfect information, with potential exceeding practical expectations. Or the inclusion of numerous celebrity financial, technological, or economic advisors that one can easily find on Google.
Examples of notable instances of False ICOs include the Confido project which garnered over $375,000 in investments and the Centra project with $32 million in investments. However, it should be noted that these projects were later exposed by the media and their founders were arrested. Additionally. The value of their cryptocurrency tokens plummeted, rendering all investments made therein meaningless.
Giving coin/token on social networks
It is highly advisable for investors in the Crypto market to closely monitor news and information on social media platforms, especially those originating from individuals with significant influence on the market. However, it is equally important to exercise caution with regards to fake accounts that offer gifts, such as valuable tokens.
More specifically, if you receive any notification similar to “Send 1 BTC to this address and receive a larger sum in return,” congratulations, you have encountered a Scam. It is imperative that you avoid any messages or notifications offering digital currency rewards without any justifiable reason. Digital currency is considered an asset, and nobody is willing to give it away for free.
Falsely claiming affiliation with a renowned exchange platform
To ensure that you are accessing a reliable trading platform, it is important to pay close attention to the URL address. This is due to the fact that such addresses can easily be impersonated by making minor changes to characters, such as replacing “o” with “0”. Perpetrators can quickly create a fake website that looks identical to a reputable trading platform. If you access and make transactions on such a site, there is a high likelihood that you will lose all of your assets without warning.
Therefore, it is advised to thoroughly verify the trading platform that you are accessing and bookmark the website to avoid falling prey to fraudulent schemes. Additionally, it is recommended to pay close attention to the legitimacy of the trading applications downloaded on your mobile or web browser. As there exist numerous incidents where trading platforms and applications have been counterfeited, leading to substantial losses for unsuspecting users.
Emails containing logos and addresses that appear trustworthy are being sent to redirect you to other websites or to invite you to participate in certain programs, which may potentially be a scam. When receiving such emails, it is highly recommended that you refrain from immediately clicking on any links or submitting any personal account information, as doing so could leave you vulnerable to a potential account breach and loss of assets. It is important to exercise caution and remain vigilant in protecting your personal information and assets from potential online threats.
Fake Support team
The objective of this form is quite similar to phishing email, which is to extract personal information and attack your account by impersonating project support groups and requesting money transfer, provision of personal information, and provision of private keys.
It is of utmost importance that you refrain from divulging your account information and personal passwords to anyone, under any circumstances. Please take note of this crucial precautionary measure.
In addition to creating fake websites, individuals and organizations engaging in scams may also attach advertisements to lead you straight to fraudulent websites. Therefore, the most effective way to prevent these forms of fraud is to always bookmark legitimate websites that you frequently use and to check the URL and advertisements before clicking on any links.
There are numerous cases where even if you have entered the correct URL, you could still be redirected to deceptive websites. The reason behind this is the highly sophisticated scamming techniques employed by some competent hackers. However, this issue is not entirely out of control. It is advised to verify the SSL certification of the website you are accessing, and if the certification is erroneous or does not match, exit the website immediately.
This is a type of pyramid scheme that has previously yielded profits of up to $2 billion from investors with the Bitconnect project. Specifically, this approach employs various means to achieve a large following and complete successful marketing. To fully execute this strategy, individuals and organizations play on the emotions of investors seeking attractive and exorbitant returns on investment. Consequently, they attract more and more willing investors to put their money into the cryptocurrency in hopes of receiving lucrative interest yields. However, after a short period, or even a year with Bitconnect, these projects will execute an exit scam or a simultaneous coin dump. Causing the coin price and market capitalization to plummet uncontrollably.
To mitigate the risk of falling victim to fraudulent activities in this format. It is advisable to conduct extensive research on any project and exercise vigilance towards excessively appealing gains and interest rates that exceed realistic expectations.
Malware & Crypto Mining
There are two types of malicious software that can silently infect your computer’s resources while using the CPU and GPU to mine cryptocurrency. This unauthorized use of your machine’s resources can result in the transfer of mined coins to an unauthorized account, all while you continue to run and maintain your computer. To prevent this from happening, it is important to exercise caution when installing software for cryptocurrency trading and to verify the authenticity of both the application and its source.
Fake Pools and OTC Scams
One may also be solicited for contributions through the sending of funds to a particular group in exchange for future ICO tokens via Discord or Telegram groups. However, it is undoubtedly challenging to join such groups, especially for new individuals. Therefore, if an individual happens to stumble upon groups that require excessive monthly fees, it is highly likely that these are phony Pools.
To avoid such situations, it is advisable to exercise caution when participating in any community. During OTC transactions, it is recommended that you seek out a reliable third party as your custodian to safeguard your funds.
Pump & Dump
This type of scam does not directly attack your account, but targets the psychological vulnerabilities of greed and fear of missing out among investors. Specifically, Pump & Dump groups manipulate the volume and price of a low market cap and lesser-known coin/token. During the pump phase, they may combine buying large amounts to quickly increase the coin’s value. When it reaches a certain price level, they spread rumors and sell at a lower price, causing a dump.
Individuals with limited experience in playing may fall victim to baseless rumors due to their tendency towards greed. Consequently, we advise you to steer clear of this psychological trap, particularly in relation to less familiar coins.
This is a strikingly simplistic form of scam where the attacker calls the mobile phone provider and requests a switch to a new Sim number. This enables them to gain access to the email, 2FA, and other related tools for the purpose of stealing assets.
Key factors to recognize forms of Crypto Scams
In general, scam tactics come in a variety of forms and there are numerous approaches which scammers take. In fact, these tactics are created daily with schemes ranging from simple to intricate, all aimed at attacking user accounts and stealing their assets. Nevertheless, to promptly and accurately identify such methods, individuals can rely upon the following key factors:
- Promising significant profits: It is important to remember that investing always comes with risks and potential gains or losses. There is no form of investment that guarantees high returns without any risks involved. Therefore, caution should be exercised when considering projects that offer returns exceeding 10% per month without requiring any action.
Focusing solely on recruiting new members can lead to potential pitfalls in certain referral programs, such as large exchanges like Binance, which employ commission-based incentives for bringing in new users. Conversely, legitimate referral programs are often based on voluntary participation rather than mandatory recruitment of multiple users, with referral commissions being distributed across multiple levels. Engaging in the latter scheme may result in unknowingly participating in a Ponzi scheme.
- It is crucial to prioritize the security of personal information when dealing with the Crypto market, as it upholds anonymity as its main characteristic. It is therefore advised to refrain from disclosing any personal details such as passwords, private keys, security phrases, or other personal information to anyone. It is important to bear in mind that any ICO project that requires personal information or passwords are most likely fraudulent.
- Scams will always remain scams. Therefore, it is highly likely that if one comes across startup companies or projects that involve individuals who have been previously accused of fraud, it is probable that it will once again turn out to be a fraudulent scheme.
- It is recommended to refrain from placing excessive trust in web pages or articles related to a particular project. Instead, it is advisable to validate information by reviewing LinkedIn profiles, cross-referencing with social media accounts such as Facebook/Twitter or Google, and verifying that the project has been publicly and transparently disclosed. Failure to comply with these precautions may result in falling prey to scam activities.
A poorly-designed website, also known as a fake website, is typically created and designed in an amateur manner. If you are familiar with the layout and interface of legitimate websites, you can immediately recognize when you have entered a fake website. However, if you are new to the market, you can identify this factor by observing the website’s visual design, considering if the color scheme and features are well-coordinated and whether or not there are many advertisements and promotions.
With the shared information, it is hoped that you have had the opportunity to understand the complexity and diversity of various Scam projects, while also being aware of ways to prevent Scams in the face of the cunning nature of these fraudulent forms. Although these projects exist in many forms, there is no need to overly worry. By being cautious and familiarizing yourself with key Scam identification factors, you can gradually become more acquainted with avoiding losses. We wish you success.
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