How To Spot A Cryptocurrency Scam
You should be cautious if you are interested in investing in cryptocurrency. There are many scams associated to the industry. These scams can result in you losing your money, but you can avoid them if you are able to recognize them.
Imposter or impersonation scam
According to refundee.com/crypto-scams, a common scam that targets the unwary is an imposter or impersonation scam using cryptocurrency. These scammers may pose as trusted sources such as a government agency, credit card provider, or other similar entities. They might also pretend to be celebrities. Often, imposter scams start via email and can involve fraudulent websites. In such cases, it is crucial to double-check the legitimacy of the website before proceeding to complete transactions.
Another imposter or impersonation scam involving cryptocurrency involves imposter accounts on social media platforms. Some imposter accounts are posing as crypto evangelists. Some imposters use photos of real people to spread false news.
Rug pulling scam
Rug pull cryptocurrency scams are a common scam that aims to lure early investors with promises of up-and-coming tokens or successful crypto projects. The scammers usually create a polished image of their project using social media. They will then launch an Initial DEX offering on a decentralized exchange to raise funds. Once the initial offering is complete, the scammers will seize the money from the liquidity pools and disappear.
Initial coin offering (ICO) scam
The initial coin offering (ICO) scam is a common phenomenon that involves digital assets, particularly cryptocurrency. This type of investment is gaining huge capitalization due to its decentralized nature and inaccessibility. But, cryptocurrency can be exchanged to purchase goods and services, just like real currency. However, the exchange can only occur virtually, meaning that it is possible for a scam to take money from investors.
As a result, the US Securities and Exchange Commission (SEC) has taken a proactive approach to educate the public about ICO scams. In October 2017, the SEC froze all bank accounts associated with ICOs, and it has brought fraud charges against the promoters of the scheme.