Common Crypto Scams
There are two sides of the crypto coin, and one of them is not bright. Scam is inevitable in any profitable and fast-evolving industry. The blockchain industry is no exception. What do crypto enthusiasts and investors need to be aware of? What are the most common crypto scams you need to avoid?
A scam ICO is the easiest way to get fraudulent money. Let’s be honest, these days, anyone can launch an ICO and establish a fake legal person to collect funds from investors.
How to invest in ICOs safely? There are certain things to consider before you make an investment. If you can’t be bothered, better buy a lottery ticket!
Here’s a short how-to guide:
- How unique and convincing is the idea? Is it better than any other product/service offered by competitors or is it just a copy/paste?
- Copied business documentation. Is the whitepaper, business case, project presentation, etc., available on the website? Check for plagiarism!
- Who is behind the ICO? What do you know about the team and their qualifications? If the team is partly anonymous, that’s a wake-up call!
- Is there a roadmap? What stage of development is the project in?
- What do the partners, the press, and the community say?
If you can smell a rat, run.
Fraudulent crypto exchanges
Here’s another common crypto scam. Scam crypto exchanges appear out of the blue and start heavy marketing. Don’t fall for this trap! There’re plenty of reliable crypto exchanges out there that have a proven track of records and an established customer base.
CoinMetro is one of the most popular, revolutionary crypto exchanges. It welcomes users of all levels alike and currently offers six pairs for trading.
A common Ponzi scheme is a crypto project that wants you to actively attract new investors to maximize your profit. If a crypto project you joined pushes you hard, stay away!
The higher and the more unrealistic the returns offered by a crypto project, the more chances there are that this is a ‘good old’ Ponzi scheme. Check the market averages and only join real ambassador programmes.
As they say, if it’s too good to be true… it probably is!
Identifying a scam coin is similar to identifying a fraudulent ICO (see above). Check for the most common signs!
Here, we could also add absence of code base. Obviously, most cryptos are open-sourced, but scams don’t usually reveal their code base. Why? Because they simply don’t have any.
Hot wallets are easy to fake, and they can attract plenty of unsuspecting users in no time, until somebody reports crypto scam.
Our advice is to store small amounts of crypto on the exchange you usually use for buying/selling your digital cash. If we’re talking about larger sums, hot wallets are not 100% safe for storing crypto either way, and we would recommend you to choose a much more secure cold wallet instead.
Crypto scams are more obvious to spot than you may think. It’s always in the quality and standards of execution. Still, we hope things never get tricky for you, but it’s better to be forewarned and forearmed than sorry, right? For more info please also read our complete guide on crypto scams and how to avoid them.
If you ever come across any crypto scam, make sure to report it to help others. There are crypto scam lists that let users worldwide know which frauds to stay away from.
The CoinMetro Team