How to Identify Cryptocurrency and ICO Scams
Combine the fact that DeFi removes the intermediaries involved in financial transactions with the relative ease of creating a new token, and you’ve built an environment ripe for scammers to exploit. Fraudsters can easily create a crypto token and get it listed on a decentralized exchange (DEX) without going through any kind of code audit or another type of background check. From January to December in 2022, over 117,000 scam tokens were created, stealing billions of dollars from unsuspecting investors. Sometimes called “digital collectibles” by big brands including Starbucks and Instagram, there are plenty of scammers who target both newbies and old pros in the space. For example, this could occur if a fake celebrity social media account posts that if followers send them a certain amount of cryptocurrency, they will send back twice the amount. In fact, followers will send money directly to scammers, never to see their investment again.
- A good habit to prevent going to malicious websites is to bookmark any legitimate sites you use for crypto and use only those bookmarks to visit those sites.
- Before this process, there is generally a document published, called a white paper, for the public to read.
- This heist not only left a trail of financial ruin but also a lingering sense of betrayal among its users.
- Your best chance of a successful investment relies on a company having an achievable, feasible set of aims.
How To Report Cryptocurrency Scams
Here are the most common crypto scams, how to avoid them, and what to do if you’ve been scammed. Though cryptocurrency can be an attractive investment, it’s more susceptible to scams than any other payment method. Over $1 billion has been reported stolen through crypto scams between January 2021 and June 2022, according to a report by the Federal Trade Commission. One scam unique to social media comes from YouTube, where people set up fake livestreams to bilk viewers out of their crypto. The scammer creates a legitimate-looking YouTube livestream, often using stolen content to boost their authority, and posts links to giveaways or other seemingly tempting content.
Investment or business opportunity scams
Just as financial criminals will try to steal money from your bank account or put fraudulent charges on your credit card, crypto scammers will do anything to take your crypto. To protect your crypto assets, it helps to know when and how you’re being targeted and what you can do if you suspect that a cryptocurrency or any communications related to it are a scam. With thousands of crypto tokens and coins on the market, distinguishing between legit currencies and phony projects is becoming increasingly difficult. There are, however, a few red flags that indicate some cryptocurrencies aren’t all they claim to be. Learning how to identify fake cryptocurrency is crucial to proactively avoid falling prey to fraud. Even the most successful ICOs and cryptocurrencies are slammed for being fueled by speculative investing.
Crypto is a high-risk investment, and no asset can reliably guarantee high returns. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable utility token vs security token reviews of their products or services. We believe everyone should be able to make financial decisions with confidence.
Be wary of get-rich-quick scams
By staying informed and proactive, you can effectively safeguard how to buy eclipse token on trust wallet your digital assets and contribute to a more transparent and secure crypto environment. Cryptocurrency, a realm of immense potential and innovation, unfortunately, isn’t immune to the darker shades of deception. The following case studies of notorious fake cryptocurrency exchanges offer a stark reminder of the perils lurking in the digital finance world.
Many entering the crypto market lack a comprehensive understanding of its workings, making them susceptible to scams. The irreversibility of blockchain transactions exacerbates this issue, as funds lost to scams are often unrecoverable. For more tips on crypto safety and in-depth educational articles on essential Web3 topics, visit our dYdX Academy.
These links can be malicious phishing attempts or simply direct you to send your crypto for the “expert” to invest. Check the history of the channel, including when it started and the other videos they’ve posted, to avoid being duped. One of the biggest red flags of a cryptocurrency scam is receiving requests for cryptocurrency payments. Remember, cryptocurrency is not entirely government-regulated and is not yet widely accepted by businesses, so you should never have to pay in cryptocurrency. If someone, even a trusted online connection, insists you must, that’s a major warning sign of a scam. Similar to investment or business opportunity scams, employment scams involving cryptocurrency often begin with an unsolicited job offer that lures victims to a fraudulent website to learn more about the opportunity.
Avoid getting tricked by checking any sender’s email address and making sure the sites they are linking to are legit. Often, phishing email addresses will slightly misspell a real site – i.e., Gogle.com instead of Google.com – or send you to a site that contains similar errors, such as coinbase.co instead of coinbase.com. A good habit to prevent going to malicious websites is to bookmark any legitimate sites you use for crypto and use only those bookmarks to visit those sites.
White papers should always spotlight the members and developers behind the cryptocurrency. There are cases in which an open-source crypto project might not have named developers, which is typical for open-source projects. Still, you can view most coding, comments, and discussions on GitHub or GitLab. Some projects use forums and applications, like Discord or Slack, for discussion. If you can’t find any of these elements, and the white paper is rife with errors, stand down—it’s forex trading diploma ~ london institute of business and management likely a scam.