With the rise of any industry, illegal sub-industry related to it will also develop. In the crypto industry, which is full of greed and desire, scams are more diverse and difficult to identify. Today we will list several common cryptocurrency scams to help investors prevent them.
Ponzi scheme is a hoax that exists for a long time and is effectively facilitated by the use of blockchain.
In a Ponzi scheme, you may hear about investment opportunities with guaranteed profits. Often, you will see masquerading as a portfolio management service. There is actually no magic formula at work - the "profit" you get is just other investors' funds.
The organizer adds the funds of newly collected investors to the cash pool, and the only cash inflow comes from new entrants, and previous investors will receive funds from new entrants. As new entrants join, this cycle will continue and when there is no more cash to maintain investor income, the scam will quickly disintegrate.
In the crypto industry, a lot of Ponzi scheme organizations will claim that the investors’ profit is protected by the smart contract which means that no one can tamper with. However, the truth is that not everyone is a tech master and the fact never follows their promise. The advice to investors regarding Ponzi Scheme would be NEVER investing in any project with a high rate of guaranteed profits and please make sure your service provider is trackable.
In common Telegram scams, you can see scammers lurking in official groups for crypto wallet or exchange. When a user reports a problem in the group, he will contact the user privately, impersonating a customer service or team member. And induce users to share personal information and mnemonics.
If someone knows your mnemonic, they can use your funds. Under no circumstances should you disclose this information to anyone or even legal companies, because your mnemonic phrase is not required to troubleshoot the wallet, so it can be determined that anyone who asks you to provide the mnemonic phrase is a scam. Do not share your private key and mnemonic phrases with others. This would be Lesson 101 for your crypto curriculum.
Other security tips include:
l Check the URL of the website you visit. The scammer will usually register a domain name that looks very similar to the real company.
l If you have any questions about the information you received, please ignore the email and contact the merchant or customer service through official channels.
Social media giveaway scam
It’s amazing how generous everyone is on Twitter and Facebook. When you check the tweet replies with high attention, you should see that one of your favorite cryptocurrency companies or influencers is giving away Bitcoins. Usually, they are promising you in this way: If you send them BTC/ETH, they will give you 10 times the amount back! This looks really too good, but unfortunately, this is a classic scam.
On social media, you should be wary of this type of news. They made it like real so that they can successfully cheat enough people. The messages may come from accounts that seem to be the same as you know but in fact, this is just part of the cryptocurrency fraud technique. As for the dozens of thank-you replies in the comments, they were also posted through fake accounts and were only part of the gift scam.
On the first hand, it easy to tell that these accounts are fake by checking their account name and number of followers. On the other hand, you should be fully aware that there’s no free meal in the world.
This type of scam is a more professional way of phishing. Instead of impersonating the official team members, the scammers replicate the App, such as fake exchange and fake wallets.
Once a user installs malicious applications, although everything seems to be working properly, these applications are specifically designed to steal your cryptocurrency. In the crypto industry, scammers will usually aim at some famous crypto Apps. Many users have downloaded malicious applications, inputting their credentials without noticing the risk. Then the scammers will steal these credentials to steal away all the assets.
To avoid getting infected with them, you should only download from official websites or links from reliable sources. When using the Apple Store or Google Play Store, you also need to check the publisher's credentials.