Are you aware of the cryptocurrency scam in the crypto industry? With the increasing number of investors in the cryptocurrency industry, this has paved the way for scammers to operate in the market. These scammers are continuously looking for ways to prey on new investors who are “infatuated” with the potentials of the market.
Daily, they are finding new techniques and schemes to defraud people of their digital currencies. If you are a new investor, how can you beat them to their game?
The game of scammers
A lot of people have become the target of different illicit scams and frauds in the cryptocurrency ecosystem. We have heard of stories of investors becoming millionaires overnight because they invested in one platform.
The excitement of their returns becomes a motivation to invite others to the same platform. With promises of increased returns on each referral, the appetite for more gain overshadows their judgment.
However, after some time, these scammers use one excuse or the other to run away with all the money invested by these naïve investors.
At times, it starts with website maintenance or upgrade, and suddenly they have disappeared to thin air, leaving their victims to lick their wound. For many, it has led to serious health challenges as they couldn’t cope with losing their investment.
Nevertheless, as vast as the cryptocurrency market is wide, if you are a new investor or beginners in the market, you can identify these scammers, and you don’t have to be a detective.
The Rise of Cryptocurrency Scam
Undoubtedly, investing in cryptocurrency is risky, and we have heard many stories of people turning from rag-to-rich. However, lately, we have seen an influx of scammers flooding the market; this has contributed to its restriction in certain countries. We have seen stiffer regulations since these scammers have intensified their game online.
How scammers lure investors
Regrettably, Scammers often lure investors into their snare by promising to double their investment. Most times, naïve investors fall into these traps after being enticed with mouthwatering deals. However, these scammers follow the same pattern in executing their schemes.
Crypto-Scams in the Cryptocurrency Industry
Nevertheless, despite what anyone might think, cryptocurrency has come to stay. Ever since its introduction, the way business is conducted has transformed tremendously. However, while a lot of platforms are encouraging the use of cryptocurrency as a means of payment, it is important to be careful.
Here are a few ways scammers use to take advantage of investors in the cryptocurrency market. Understanding the technique behind each cryptocurrency scam will give you an edge over such fraudulent individuals.
Fake Exchanges Cryptocurrency Scam
A malicious threat imposed by crypto-scammers takes place through fake exchanges. Even though an exchange is a virtual currency, it’s still traded on traditional exchanges.
Scammers tend to take advantage of this situation. These fake exchanges operated by these scammers lure unsuspected investors by offering huge discounts.
It is not that difficult to identify this kind of fraud in the system. The Korean financial authorities sued various South Korean exchanges in 2017 due to enticing promises by these exchanges.
Such acts by these exchanges are against the country’s rules and regulations. A Korean exchange BitKRK swindled buyers and investors billions of dollars before the Korean financial authority intercepted their operation.
Fake initial Coin Offerings (ICO)
Cryptocurrency has paved ways for companies to raise capital through ICOs. With the increasing number of blockchain companies, an inevitable rise in fraud is evident. Scammers have used ICOs to defraud investors amounting to billions of dollars by raising capital via ICOs
The most popular crypto ICO cryptocurrency scam in history is the Bitconnect scam. It managed to boost itself from an obscure ICO to a crypto project in just a year, valued at over 2.6 billion.
Many scammers are using the same method to promise their victims significant returns. To avoid such cryptocurrency scams, ensure to perform a background check on any ICO company before investing in their scheme.
Fraudulent Websites
Several fake crypto-websites are in use throughout the world. These websites tend to have resemblance with the original ones. Even experienced investors sometimes accidentally fall prey to these websites.
An easy trick to identify authentic websites is, “HTTPS” revealing that it’s an encrypted site. Beware of any website claiming to be an authoritative cryptocurrency dealer without having “HTTPS” in the URL.
Nevertheless, today, even websites with “HTTPS” appear to be fake since these scammers have upped their game. Be on alert for any red flags if you want to invest in an online cryptocurrency platform.
Cloud Mining cryptocurrency Scam
Cloud mining is a popular way of earning virtual currency without the buying and selling of digital currencies. It is a resource-intensive activity that comes in handy.
Importantly, Investors stand to earn a huge profit without having to invest in extensive hardware. With more and more crypto-coins coming into existence, it takes in a massive amount of power and money to mine.
Be Watchful
Undoubtedly, almost all financial market has scammers lurking around to scam unaware investors. Scammers are evident in the market, and securing your investment is the first priority before thinking of profiting from it.
Finally, before investing in any cryptocurrency-related investment, ensure to perform your own research about the company. You can also check the date the website is created and verify if they are true to when they started their business.
