4 Common Cryptocurrency Scams You Should Watch Out for in 2022 | Ask the experts

4 Common Cryptocurrency Scams You Should Watch Out for in 2022

Many people are interested in making money from cryptocurrency, but the industry is still relatively new and risky. If you’re new to cryptocurrency, you might be wondering what types of scams you should watch out for and how to avoid them. We’ve put together this list of 4 common scams we think you should be aware of as you navigate the crypto world.

Schemes of pumps and dumps

The first rule of the Pump and Dump club is: DON’T TALK ABOUT THE PUMP AND DUMP CLUB. Okay, that’s not true. No need to talk about it R&D Schemes, but you should be aware of them. When it comes to crypto scams, they are some of the most common types out there.

Crypto is a relatively new asset class with little regulation and a lot of excitement about its potential as an investment vehicle. This combination can create conditions ripe for fraudsters. That said, if you know how to spot a P&D scheme, you’ll be miles ahead of anyone who doesn’t even know what it is (some crypto humor).

So what exactly is a pump and dump scheme? Basically, it’s when someone or a group of people try to artificially inflate the prices of cryptocurrencies increasing the hype around him. They then sell that asset at its inflated price and dump their holdings while leaving everyone else holding the bag (or, in this case, probably something like XRP).

ICO scams

An ICO, or initial coin offering, is a type of fundraising activity in which investors buy tokens at a discounted price in exchange for their cryptocurrency. This is one of the most important and common ways that new crypto projects can raise money, start their businesses or communities, and enrich the cryptocurrency market.

However, due to the lack of regulation in this space and the potential to make incredible amounts of money through a ICO — as well as the fact that ICOs have little oversight until they’re up and running — it’s easier for scammers to prey on unsuspecting people by launching fake ICOs. These scams are becoming more and more common and there are several things you should be aware of before investing in any type of cryptocurrency online.

Romance Scams

Romance scams occur when someone creates a fake profile to target people looking for relationships online. Romance scammers pretend to be interested in the victim, usually by sending love letters, links to meaningful songs and talking about their feelings.

The scammer builds trust with their victim and then asks them for money, often under the pretense of needing it for travel or medical expenses. If you use online dating platforms, be careful if someone you met online asks you for money. It’s best to keep your guard up until you can verify who they are in person.

Fake investment platforms

It is important to do your due diligence on a platform before investing. You should look at reviews, scam reports, how long the platform has been in business, and other relevant data. If possible, you should also check with the founders of the platform and see if they have any experience running similar projects or businesses. This can be surprisingly easy to do if founders are public about their past activities on LinkedIn or other social media platforms.

Another red flag is unrealistic returns. If an investment opportunity promises that you will increase the value of cryptocurrency in a very short period of time, it may be too good to be true. However, this does not mean that cryptocurrency investments do not have high returns, many of them do! It just means that if you’re investing based on potential returns, make sure those returns look reasonable given historical performance and market conditions.

Let’s say you see an investment opportunity where there is no white paper available during your research process. In this case, that’s another red flag that maybe this isn’t a legitimate project after all. A white paper is essentially a roadmap for an organization’s goals and objectives around technology development, as well as how its operations will function once fully developed.

Cryptocurrency Gift Scam

Gift scams are one of the oldest tricks in the book. Scammers use fake accounts to impersonate celebrities and CEOs who often have a large social media presence. Then they announce that they are giving away cryptocurrency, tricking people into sending them cryptocurrency in order to receive a share of it (which, of course, never happens).

The cryptocurrency market is full of exciting opportunities and it’s easy to get carried away by the possibilities. But remember that with these possibilities come dangers. It is important to be vigilant when trading or buying cryptocurrency.

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Jennifer Ahdout

Jennifer Ahdout

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