In 2021, just a short few years ago, the King of Scams in Crypto, was also the most popular currency being used. BSC
The numbers speak for themselves, BINANCE Smart Chain in 2021 was cited for a vast majority of all crypto scams being launched in crypto marketplaces, with a possible 5 to 10 Billion dollars being swindled from 2021 to now.
A report by blockchain analytics firm CipherTrace found that Binance Smart Chain was responsible for over 45% of all scam-related funds in the first half of 2021. The report also noted that Binance Smart Chain's popularity among scammers was due to its low cost of minting and organizing scam projects.
Crypto news outlet Decrypt found that several scam projects had raised millions of dollars through Binance Smart Chain-based tokens, only to close their doors and launch again under another name.
The report cited several examples, including SafeMoon, which had raised over $2 billion at its peak before its price crashed.
Decrypt also noted that Binance had faced criticism for not doing enough to prevent scams on its platform and several researchers have pointed out how easy it is for scams to operate in the open, while scamming it's users, simply because Binance refuses to intervene or create controls to stop, hinder or vet projects launching in their chain.
How typical BSC Scams Work
In a typical Binance Smart Chain scam, the scammers will create a new token or project and promote it heavily on social media platforms like Twitter and Telegram.
They may claim that their project has revolutionary technology or that it has the backing of famous investors, popular identities or well liked influencers. They then use this "clout" of trustworthiness to spin up excitement and engagement over their fake project, generating buys and trapped liquidity.
Scammers can use several tactics to drain liquidity and enrich themselves, but one common operation is known as a "rug pull."
A typical rug pull back in 2021, was a type of scam in which the scammers create a new token and promote it to unwitting Investors. They may even use audited smart contracts to create the token, giving investors a false sense of security.
Once investors start buying the token and the liquidity pool grows, the scammers suddenly remove liquidity from the pool, causing the token's value to plummet. They then sell their own tokens for a profit, leaving other investors with worthless tokens and drained liquidity.
Today, the "slow rug pull" is more common, and extends the amount of time that scammers can enrich themselves, and increase their profits. This scam takes time and a willing number of team members willing to risk it all to keep the scam momentum going. These scams are harder to spot, because they are maticulous in how they drain the liquidity, instead of suddenly dumping, they slowly use the liquidity as personal bank accounts that uneducated investors slowly fill over time.
These scams operate at the surface as a reputable company, even attending special events, crypto shows, or even funding events or earning special titles for their monetary contributions but ledgers don't lie and slowly proves these scams to be just that, scams.
By then though the damage is already done and the wealth already obtained by the scammers. While it's investors slowly "wake up" to the scam and eventually react by leaving or dumping the scam itself, it may be too late for many to recapture losses.
What Questions do BSC Scams Hate Being Asked
It's important to ask the right questions to avoid falling victim to scams. Here are three questions that scammers hate being asked:
Who is the team behind the project, and what are their credentials? Scammers often create fake teams and identities to give their projects an air of legitimacy. By asking for more information about the team and their experience in the industry, you can help weed out potential scams. Often enough CEOs are brand new unvetted personalities with no previous history in the crypto industry, and just spring up out of nowhere.
What problem does the project solve, and how does it differentiate itself from competitors? Many scams use vague language and promises of high returns to lure in investors. By asking for specific details about the project's value proposition and market position, you can gain a better understanding of its potential for success. Most projects will spin and refill the questions with more promises and investment rhetoric, while ignoring the fact they can't provide real answers. Commonly enough, this is where most scams fail and will up the stakes by acting even more reputable, while having nothing to back them factually. They may even attend Blockchain events and propose "We wouldn't have been at event X if we were a scam."
Ask if they can provide verifiable proof of partnerships or collaborations? Scammers often claim to have partnerships or collaborations with reputable companies or organizations to gain credibility. However, these claims may be false or exaggerated. By asking for verifiable proof, such as press releases or official announcements, you can help confirm the legitimacy of the project. Sometimes the details are the nail in the coffin and they again need to respin or change the narrative to distract users.
Unfortunately the masses of users are not all capable of understanding the risks or even how to DYOR into scams and often defend their investment until the very end, even supporting the actions of the scammers as typical business maneuvers. They may even say things like Investigations and immutable smart contract ledgers are wrong, all the while the scammers enrich themselves while investors have no idea they are defending a scam.
Can You Report a BSC Scam to the SEC?
You can report BSC scams to the Securities and Exchange Commission (SEC) using the following steps:
Go to the SEC's website and click on the "Report a Concern" link, which can be found in the top-right corner of the homepage.
Select "Investment Scams" from the dropdown menu of options.
Choose the appropriate category that best describes the scam you are reporting. This may include Ponzi schemes, unregistered offerings, or fraudulent investment schemes.
Fill out the online complaint form with as much detail as possible about the scam, including any documentation or evidence you may have.
Submit the form to the SEC, and a representative will review your complaint and follow up with you if additional information is needed.
It's important to note that reporting a scam to the SEC does not guarantee that you will be able to recover any lost funds. However, by reporting the scam, you can help prevent others from falling victim to the same scheme and potentially assist in the investigation and prosecution of the scammers.
Overall, be smart enough to question everything.
Don't be afraid to ask the most important questions and stand behind others who also question or attempt to get answers. Commonly enough, scammers will shame users who doubt their actions or question their motives. They will use the community itself to blacklist investors or ban users directly from the community.
Scammers will also attack legitimate reports and users with concerns by using social media, often making claims against users to hurt their reputations or backgrounds.
Some scams will also physically threaten researchers and awakened investors with bodily harm or legal threats for uncovering the scam itself. These threats commonly come from investors entrenched with the scam itself or the team of scammers behind the project. Never ignore these threats and report them immediately to authorities.
BSC scams are some of the most dangerous scams in crypto, with bad actors that have been tied to terrorism and criminal regimes, often times coming out of hotbeds of regions where terrorism and criminal actors are prominent.
Often these scammers will use certain nations are their home front, like Dubai for instance, which is home to an assortment of scammers who relocate to Dubai to avoid prosecution or obtain protection, as Dubai is a non extradition treaty nation and offers a safe haven for scammers, unbeknownst to the Government, or at least that is how things appear today.
Obviously, if the Dubai government knew they were harboring scammers, they would react accordingly. At least that's what researchers are hoping for, as more and more scams originate from these regions and less is being done to curtail this trend. Time will tell how long places like Dubai will ignore the criminal activities of scammers while hoping for inclusion in geopolitical outcomes.
