Naija CryptoGuide

Cryptocurrency Scams and how to avoid been a victim

Cryptocurrency scams that you should get yourself familiarized with to avoid been scammed. As digital currency gains popularity among investors, cryptocurrency scams are on the rise.  You have to protect yourself and your funds so you don’t become the next victim.

Bitcoin’s value has risen substantially over the past decade after the introduction of Blockchain technology. Now, they are worth more than billions of US dollars. This has attracted the attention of investors and Bitcoin scammers as well.

This is a common tactic that targets unprepared beginners (victim), who then end up losing their BTC.  In this article, I’ll show you 4 crypto scams that you should not fall for.

Let’s get started,

What is a scam?

A scam refers to any scheme or business that takes money from someone who is not paying attention. Online scams are increasing as the internet makes the world more connected. It’s up to you to be cautious when dealing with people on the Internet.

What is Cryptocurrency scam?

A cryptocurrency scam involves the theft of money from individuals who are looking to invest in the new digital currency.

It is important we remember that scammers can be very skilled and will be far more subtle and careful than we are. And, in the end, you may not even realize anything has happened until they are gone. Scammers seek to seize their victims’ personal information. This includes names, addresses, financial data, and any other information. These details will be used by scammers to take money from the victims’ bank accounts, run their credit cards to the limit and often move such funds out of the country.

Here is what people have to say about scammers.

Although the company won’t call you to request your Social Security number or account number, nefarious fraudsters might.

— Ellen Marks

Most people are already aware of suspicious emails and phony calls. Text messages are now the next frontier for scammers trying to con you.

Consumer Reports.

So what are the 4 types of cryptocurrency scams?

How to Avoid Scam token in 2022

The 4 types cryptocurrency scams

Note: A  scammer : anyone who participates or commits a fraud scheme or operation. They employ many of the same techniques that con artists use for decades.

#1. Fake crypto exchange scam

Most fake cryptocurrency exchange scams present itself as a place that allows you to trade and exchange Bitcoin. They pretend to be involved in real trading.

Read: What is Decentralized Finance (DeFi)?

The exchange will claim it is a licensed and regulated exchange that offers a 5% discount at market prices.

You should be wary of high returns promises. It is impossible to guarantee a return of this magnitude. The first thing to do when you visit any exchange site is to make sure it’s secured with HTTPS and not HTTP. If it’s HTTP without an “s”, be careful.

#2. ICO crypto scam

Initial Coin Offering is the acronym for “ICO”. Companies and startups use this coin offering to raise funds to start new projects, tokens or services. This is how ICO scams trick investors into believing it’s a real project. They raised partial or full funding through the ICO process but did not complete it all and were dropped mid-way. Some projects will pass the ICO funding stage, but they may not be listed on the required trading exchanges. The fraudster will disappear with your money. Since the crypto token is not backed with real use value, it will become useless.

Read: What Is Crypto Launchpad and How Does It Work?

To avoid this scam, you must observe the following:

  • The whitepaper of the project.
  • The team behind it.
  • You should check their social media profiles and,
  •  The contributions to their followers if they have a product.

#3. Defi Rug Pulls

A Defi Rug Pull fraud involves developers running off with investor funds after abandoning a project. Once investors have traded their ETH for the listed token on a DEX, the fraudsters then take everything from that pool and plunge the token’s price to zero.

Centralized Exchange’s audit tokens unlike Rug Pulls tokens on DEX such as PancakeSwap Or UniSwap where creators can list tokens at no cost and without audit.

Read: Top DeFi Lending and Borrowing Platform

To avoid this crypto scam:

  • Verify the credibility of the team and their social media profiles
  • You can also verify the number of token holders using block explorer tools such as etherscan.io or bscscan.com.
  • A white paper that has multiple meanings or is unclear is a red flag and a sign of a scam.

#4. Social media scam

Social media can be used to reach large audiences. It’s easy for fraudsters to make their messages appear real and credible. Sometimes it can be difficult for investors to see through them. To distinguish the difference between original and fake.

Many investors use social media for help with Bitcoin investment decisions. These tools may be beneficial for investors, but they can also make it attractive for fraudsters.

Read: How to Earn free Cryptocurrency

Scammers use the social media platforms to conceal their identity and market their scam to Bitcoin users using ads and offers. If you’re interested in an investment promo, make sure to research it before you submit your details like your email address and phone number.

Scammers may pretend to be from trustworthy and legitimate sources and offer an attractive Bitcoin investment promotion. Avoid this cryptocurrency scams.  Doing a quick search for the investment promotion is key to avoiding Bitcoin investment fraud via social media. If the company is using social media to promote a deal, they will post it on their homepage. You should inspect any URL you don’t know about. Fraudsters want you to not investigate before investing. Protect yourself. Clicking on the URL can send you to their fake webpage where you will be tricked to provide your information. Be careful.

 

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