Cryptocurrency scams are becoming increasingly common, targeting newbie investors the most. Here are the top three instances to make you aware of such Ponzi schemes.
As cryptocurrencies gain more acceptance among investors across the world, the increasing instances of crypto frauds have raised concerns within the industry. In 2019, it was recorded that crypto frauds led to a loss of $4.4 billion, which was a huge leap from the $1.7 billion loss of 2018.
The crypto scammers use an array of tactics to dupe the newbie investor, enticing them with the promise of great returns against even bullish coins. Amateurs often give in to the greed and fall into the elaborate trap laid forth by the fraudsters. However, not all scams are directed towards robbing the layman investor. There have also been instances where Ponzi schemes were elaborately planned and executed, impacting the overall digital currency market.
Such stories of fraud earn a bad name for the growing industry and add to the skepticism that still many feel about investing in digital currencies.
Crypto Scam Instances to Watch Out For
Here are some of the common instances of cryptocurrency fraud schemes that one needs to be beware of:
Posing as the ‘Good Guy’
In these kinds of scams, a person with considerable crypto knowledge takes advantage of the newcomers in the crypto space, who display concern over market fluctuations. The perpetrator will pose as the good guy to the investors and promise them to reimburse the initial buying price of the crypto that’s being held at loss. They will be promised to be returned the amount in the form of an ETH or BTC. However, the reimbursement will never happen and the person will just steal the crypto.
The Pool Wallet
This mostly takes place in chat rooms where individual investors hold a lot of the same or different cryptos. Here the scammer taking the role of a seasoned crypto trader will approach the chat room and brag about how much that person is earning by day trading through pooling wallets with friends and that they are looking for more traders for larger gains. The scam begins when the person will promise that all that any investor has to do is send all the crypto to the wallet. The trading will be done on the investor’s behalf and the profits will be returned to the individual. But as soon as the cryptos reach the pool wallet it is gone forever. In such cases, one should use their better judgment and see if the person who is offering to do the trading, has anything to gain from it or not. In the case of the latter, it is a trap to avoid.
The Crypto Giveaway through Imposter Accounts
This is a quite common scam that takes place on social networking sites like Twitter, Telegram, etc. There have been instances where perpetrators create fake accounts impersonating the famous ones in the crypto space. As giveaways usually go, the fake account will post something as a response to a different account and declare that they are giving away cryptos. They will ask for a small amount of crypto from the victim in return for a substantially big amount as returns which never happens. As soon as you give away the crypto it is gone forever and the fake account gets deleted. There are cases, where these fake accounts create more fake accounts to make different posts under the original scam post, validating it.
You can save yourself from these scams, by checking the handle id which comes below the display name, as that cannot be copied.
At the end of the day, as an investor one has to apply their judgment before blindly trusting a stranger promising great returns. Staying smart and alert is the only way to protect your crypto investments.