Crypto Scams are on the rise and they pose a significant threat to new investors. Crypto and Blockchain technology are becoming more popular every day. people invest in cryptocurrencies, and more than 1 in 3 crypto investors know very little or nothing about it.
Impacts Of Crypto Scams
According to the Federal Trade Commission (FTC), almost 7000 people lost around $80 Million in crypto scams from October 2020 to March 2021.
What Are Some Common Crypto Scams?
1) Most Cloud Mining Sites (Not All)
There are many cloud mining sites which offer a free mining package for a fixed amount of time and then after the time period is over they give you multiple paid packages to choose from which promise a fixed amount of profit, and the more the investment, the more the profit. Many investors who are new to crypto and don't know about crypto scams fall for this and purchase an expensive package thinking they will get a huge profit, but by the time they realize it's a scam, there's nothing they can do about it. There might only be a few cloud mining sites which are not scams.
2) Demanding Cryto-Only Payments
If an anyone claims they cannot accept any form of currency other than Bitcoin, it’s likely a scam. anyone demanding you pay them in Bitcoin might be trying to hoard it and capitalize on its skyrocketing value.
3) Some Altcoins (Not All)
There are some altcoins that developers create and advertise a lot and promise a very high reward for early users. Then after a lot of people buy the altcoin, the developers leave with the money. An example is the SQUID token based on the Netflix Show: Squid Game. When it was first created, 1 token was worth $0.01, but in a few days it skyrockets to $30, and within a week it reaches an all time high of $2800, and in 5 minutes it dropped to $0.00079. But even if you did manage to make a huge profit, to convert it back to US Dollars, you had to play a game, but the game didn't exist, the developers had promised that they were working on it, but they weren't. Slowly people realized it was all a scam, and investors lost millions of dollars.
4) Scam Initial Coin Offerings
The first offering of a new cryptocurrency for sale is called an Initial Coin Offering (ICO). There are many ICOs which are fake and are scams. They often have fake bios of nonexistent team members and official documents copied from other legitimate cryptocurrencies.
5) Pump-And-Dump Schemes
In Pump-and-dump schemes the creators of the scheme take money from new investors who don't know a lot about crypto by encouraging them to buy an asset based on false information. When those investors buy, the price rises, so the pumper sells, which makes the price drop, so then the investors can't make a profit, and will have to sell it at a loss. There are many Pump-and-dump discord servers in which the owner will do these Pump-and-dump scams.
Conclusion
Don't fall for scams which can make you lose a lot of money, always research before doing anything. New investors are more prone to these scams. Don't do things blindly.
