The true decentralization of bitcoin and altcoins has been on the watch by global regulators. Surely, they have lost control of the crypto world and they are threatening to crack down. One of the main reasons is the rise of Ponzi scheme-based cryptos and scammers who are taking advantage of a herd of uninformed and greedy netizens.
The unregulated and decentralized nature of the crypto world has introduced many bad actors who are duping many users and performing financial criminal activity. It takes a technical and business understanding to identify these bad actors. I am writing this article to list the most common cryptocurrency scams.
Fake live videos
The most common attempt to dupe investors are by launching edited videos of famous celebrities like Elon Musk, Cathie wood, and Jack Dorsey and streaming them live to users on YouTube, Facebook, etc. The video often looks like they are engaged in discussion and endorsing bitcoin or other altcoins. During the streaming, they announce a giveaway program and ask the viewers to send BTC and ETH to a wallet and in return, they would send back double the amount to the sender’s wallet. This is absolutely a scam and many of them have lost their money. They have fooled thousands of investors and more than $100 million dollars worth of coins have been swindled.
The video hijackers often change the channel name, and profile picture and make them look like official channels. There are instances they have hacked many users’ YouTube channels and streamed the content. I think companies like YouTube are not doing enough to protect their customers.
Social Media Frauds
Sure, the bots and fake accounts have taken over the Twitter world. Accounts posing images of well-known celebrities have popped and tweets promise them of bringing multifold returns. It’s much similar to video hijacking.
Hijackers use famous personality tweets. Like when tweets from @elonmusk go live, hijackers with fake accounts and the same profile picture comment with the fake reference to the original tweet and announce a giveaway. To get into this giveaway, users are asked just to send Ether or Bitcoin to the stated wallet address and in turn, they will receive double the value back to the sender’s address. Beware of these scammers. If you send any money like this, you will never get back.
The scam looks very simple and it’s easy to understand. Although many people have fallen for this and have lost their money.
Pump and Dump
Typically a pump and dump are formed to coordinate efforts to pump the price of a coin and dump it when investors outside the group. Most of the groups are free to join and some charge a fee to be part of the group. The group leader chooses a coin to pump the price and then dumps it at right time. Once a coin is selected, everyone in the group buys the coin at a low price and pumps the price. This creates a FOMO among the crypto investors outside the group and they all join the bandwagon. This further pushes the price of the coins higher and at right time the group sells the coins, and this creates a flash drop in the price. The group members profit, and investors are stuck holding the coins.
Paid Promotion
Many social media influencers and prominent personalities are paid to promote new projects and coins. Most of them are not aware of the nature of the project nor disclose if they are paid to promote it. There are currently no laws forcing any accountability on the promoters.
When considering investing in any crypto project, think about it like you investing in any other business. Ask yourself several questions and make sure the potential project is viable and sustainable. Never invest in anything which you do not fully understand.
Beware of all information that is popping around. Many prominent forums like Reddit also breeds tons of information and this often manipulates the users’ mind and divert them into investing in the wrong project.
