Crypto scams running rampant! FOMO could make you a victim of these fraud schemes
An easy way to scam excited blockchain newbies is to get them to buy a type of newly minted token for a game
Updated:Tue, June 28, 2022 12:56pm
By Danny Dcruze
Cryptocurrencies have been called a lot of names in the past decade, from a game-changer, a revolutionary idea that will change world economics to a sham that will bring the next big recession. But there's no denying that it is making people stand up and notice, even in non-tech-savvy circles. But that exposure also increases the chances of scams and there are plenty of those in the market.
Here we will discuss some of the scams that have been plaguing the crypto world with the help of some stakeholders who have some skin in the game.
Aritra Sarkhel, Director, Public Policy at WazirX emphasizes the need for research before jumping into the crypto investment arena. Even with numerous influencers online, there's no substitute for 'DYOR' (Do Your Own Research).
Sarkhel said, "The most important thing that investors should follow is DYOR or Do Your Own Research to understand the crypto asset they want to invest in and details about the project it's related to. In addition, also check details on the team behind the project, the investors, and the underlying white paper."
He further pointed out some aspects that will help crypto investors stay away from scams and frauds:
-Research what the communities are saying about the crypto and the founders on telegram and Reddit groups/forums.
-Check how resilient the crypto behaves on exchanges when there are significant dips.
-Please resist FOMO. Just because crypto is trending, do not just jump and invest in it.
-Do not trust random "Influencers" on Youtube/Instagram pitching for specific cryptos. Research first. Buy second.
-You do not need to buy the entire crypto. You can buy fractions of crypto. This is like fractional investing in shares in the US market.
-Understand the taxation based on the country you are in.
Kumar Gaurav, Founder & CEO of Cashaa, a crypto-friendly banking platform, believes that an investor should be well aware of the fundamentals before becoming an investor. It's when people who don't understand the basics fall prey to scams.
Gaurav said, "Teaching yourself why bitcoin is built and how it operates will help investors understand the fundamentals of crypto. That is the only way if you want to join and get benefit from this technology at such an early time. If you don't have that ability, I think it's too early for you to invest. Investing in something which you don't understand will probably make you end up with a scam."
The investor should also be aware of the various kinds of scams that are currently being used to dupe people of their hard-earned money.
Amanjot Malhotra, Country Head - India, Bitay helps point out some of the prevalent crypto scams in the market.
These are some the scams users should be aware of:
Demanding Crypto-Only xPayments
If a person or retail establishment claims they cannot accept any form of currency other than Bitcoin or Ethereum it's likely a scam. Bitcoin and other altcoins are a burgeoning asset class, so experts say credible institutions aren't going to accept crypto.
In general, anyone demanding you pay them in Bitcoin might be trying to hoard it and capitalize on its skyrocketing value. And unlike banks, blockchain lacks common know-your-customer (KYC) protocols. That means people can open wallets without having to present valid identification, a Social Security number, or an address and contact information. Though blockchain is public and creates permanent, open-access records, people can transact on blockchain more or less anonymously making it easy to trick you, take your money, and run.
Anonymous or Fake Identities
The lack of KYC protocols on blockchain is a major question mark for its widespread use.
"With a decentralized platform, there's really no safeguards in place to say who is a good actor and who is a bad actor,"
Digital Collectibles and Games
Scams like the "Squid Game" scam where sophisticated coders now have the ability to create new games and entire imaginary worlds on blockchain. And to do it as quickly as the next viral Netflix show takes off.
An easy way to scam excited blockchain newbies is to get them to buy a type of newly minted token for a game. If enough people invest in the token and drive the price up through high demand, this gives the original scammers an opportunity to liquidate all their holdings and disappear in a move known as a "rug pull."
Cryptocurrency Investment Schemes
A recent form of residing funds for a crypto project has caught on in the market and we have seen millions of dollars being raised via initial coin offering (ICO). But a large number of ICOs are also opportunities for scams. A company or individual may pitch to retain investors they have a once-in-a-lifetime opportunity to invest in a new form of crypto with guaranteed 1,000% returns. They may then lure you into depositing your FIAT or Bitacoin into a bunch of new coins into a digital wallet that's been compromised somehow, or "pump and dump" by buying up the coin and selling when the price of the new token skyrockets.
A lot of the scams happening these days are on the Dating sites. Scams like this involve long-distance or digital relationships between a couple who is in a romantic relationship in which one party pressures and convinces the other to buy or give money for some new crypto that's really just a way to scam people out of their money.
Phishing Scams in Crypto
This type of scam works very similar rot the prevalent phishing scam where the hacker sen
end emails attempting to bait recipients into clicking links and capturing their personal details including crypto wallet key information. But unlike most passwords and usernames, you only get one private key to your blockchain wallets. Once the Hacker has the key then he/she can access your wallet and scam you within minutes.