COMMON CRYPTO INVESTMENT SCAMS

Scams in general have become the backbone of all new online-based innovations.

In fact, 40% of all online users are victims of online crimes. Crypto has seen a fair share of scams with over 46k victims scammed over $1B in the last 2 years.

According to the FBI’s Internet Crime Complaint Center (IC3), they received a record 847,376 complaints of online fraud in 2021 with $6.9 billion in estimated losses—that’s an average of over 2,300 per day at around $8,100 per person with the average age of 50+ being the dominant victims.

This is mind, let's digress how these scams are packaged to lure innocent victims:-

1. PONZI SCHEMES/PYRAMID SCHEMES

This concept is born from the PASSIVE INCOME analogy where the fraudsters guarantee a specific percentage ROI like 5% daily or 20% monthly

Typically, the investors don’t really care where how the returns are generated but instead focus on the increasing income on their dashboard 

Victims are asked to enroll friends & family in the lucrative scheme to earn even more 

Usually, victims are enticed with a first successful withdrawal & enticed to invest more & enroll more people.

The bigger the pyramid the higher the risk of collapse which happens without notice.

Websites shut down, customer support lines shut down & just like that investment gone.

• TIP - AVOID GUARANTEED RETURNS & REFERRAL PROJECTS

2. PHISHING SCAMS

Ever received a pop-up of bogus security warnings or customer support? 

If not, then let me put you up to speed.

You will typically receive a pop-up link that is supposed to help you solve a virus attack on your device. 

Once you click it, they either ask you for personal details or they install a virus that tracks your personal details like passwords & emails on your device.

Once they have access, they change details, deny you access & transfer assets to their anonymous accounts.

• TIP - AVOID CLICKING SUSPICIOUS LINKS

3. SOCIAL MEDIA FAKE ACCOUNTS

You will typically receive an email or social media DM from a fake account posing as customer support of a legit platform like Metamask, Binance, or Kucoin. 

This is more common & tends to look legit to an ignorant eye.

Similar to phishing attacks, they inform you of a possible virus attack or potential upgrade that they should help you solve. 

Once they get your details, they change everything & liquidate your assets

• TIPS - CUSTOMER SUPPORT WILL NEVER CONTACT YOU

4. CELEBRITY ENDORSEMENT SCAMS

If you ever see an ad on social media with a celebrity on it promoting an investment scheme it's probably a scam.

Scammers know that you're more likely to trust your favorite celebrity than just a random person on the internet.

They take a picture & use it as the cover photo. Some go to an extent of paying the celebrities for a short endorsement clip that looks super legit. 

TIPS - Ensure the ad is from the verified page of the celebrity & also avoid clicking such ads

5. PUMP & DUMP SCHEMES

Squid game is a good example of a pump n dump scheme.

The scammers utilized the Squid game movie craze & created the squid game token which quickly gained $5M in value as a play-to-earn game.

In less than a week, the token pumped from $0.01 to $2856 then dumped to zero making the scammers a whooping $3.38M from the scheme leaving investors with worthless squid games tokens in their wallets 

These kinds of scams are very common in crypto, considering how easy it is to make a token. 

• TIP - Invest only in projects listed on major exchanges & have a public doxed team.

Finally, key points to note:-

• The truth is, scams are not going anywhere sooner or later, especially with crypto where regulations have not kicked in yet

• Do in-depth research on a project before investing

• Avoid clicking links from unknown sources

• Trust your gut feeling always

• Verify social media accounts before following back 

• Avoid Return On Investment (ROI) guarantees 

IF THE DEAL IS TOO GOOD TO BE TRUE! YOU'RE PROBABLY RIGHT!

References:-

https://www.scamwatch.gov.au/types-of-scams/investments/investment-scams

https://www.getsmarteraboutmoney.ca/protect-your-money/fraud/protecting-against-

Kimani Alex

Crypto Trader & Research Analyst