I wrote about how to identify cryptoccrrency scams on my previous article. So for now, let us learn about the common types of cryptocurrency scams
Common Cryptocurrency Scams
Fraudulent ICOs
Creating a false ICO, creating marketing buzz, and convincing people to buy is the most popular way to pull off a scam.
This is because ICOs are a fantastic and creative way to launch a company, and this is the part that is misunderstood.
Ethereum has been a breeding ground for fake ICOs, but since it is an open-source project, it is not directly liable.
Instead, it's the naiveté of newbie investors who fantasize about making 100x returns in a matter of weeks simply by HODLing useless ICO tokens.
Shady Exchanges
A ‘shady exchange' is the second most popular type of scam you will encounter. The squabbles that erupted overnight and turned into bravado. You must exercise extreme caution when dealing with such exchanges because once you trust them and deposit your coins with them, you will have no way of recovering them if the exchange's intentions are not right.
Furthermore, some exchanges that start off strong will disappear with your money at any time if they struggle to scale and innovate in order to remain competitive in the market.
Fake Wallets
With the introduction of Bitcoin, a slew of fake Android wallets have appeared on the Play Store.
That is why we strongly advise against picking any wallet from the Play Store at random because there is a risk it will be fraudulent and you will lose your money.
While these wallets will promise you the seed and control of your funds, you should never trust them without conducting thorough research.
It is one of the most popular ways to defraud people, and it occurs often during the launch of Bitcoin forks. These wallets rob you of your BTC as well as your seed or private keys.
Ponzi Schemes
Even though this type of scam is the easiest to detect, people still fall for it.
It's a Ponzi scheme if you find a crypto project that deliberately promotes the recruitment of new investors in order to increase your income. This system is designed to defraud the individual who enters the system later.
Furthermore, schemes that guarantee astronomical returns are unquestionably Ponzi schemes.
Phishing Scams
In the cryptosphere, phishing scams are another popular form of fraud.
Scammers will try to trick you into giving them your username, password, or seed keys.
Pump and Dump Schemes
Pump and dump groups on Telegram, Slack, and IRC are not fresh in the conventional industry, so why should the crypto market be excluded?
Many crypto groups with 40,000-100,000 members can be found on Telegram if you check for them.
What do you think they do in these kinds of gatherings? They don't talk to each other. Instead, these organizations are used to control the values of low-market-cap altcoins.
As a result, those who move quickly or first gain an advantage, while those who are a little late suffer the consequences of falling prices in a matter of minutes.
Impersonators
The most advanced form of deception.
Scammers create fake Twitter and Facebook accounts to impersonate the real project or the person behind it in this form of crypto scam.
Many impersonators posing as Vatalik Buterin or Binance's CEO can be found on Twitter, announcing airdrops and other offers that are never real.
Scammers have even begun posing as crypto exchange support workers in order to defraud citizens of their cryptocurrency funds.
Conclusion
Scams are nothing new in any industry, and crypto, as a decentralized and open source concept, is one of the easiest to copy.
The only way to avoid being conned is to rely on reliable sources of knowledge, as well as investor self-education through reliable sources.
