Types of Cryptocurrency Scams

With the increasing Interest of the investors in Cryptocurrency, there have been a rise in the hackers who find different ways to scam the traders. In the current scenario it becomes difficult for the investor to decide between the genuine project and a scam. Due to these scams, many of the investors have already lost their hard-earned money by trusting the wrong broker and investing with them.

In the period of Crypto, many frauds have been taken place. One of them is BitKRX which was a Korean Exchange that affirmed that it is the best in cryptocurrency business and dealing as a lawful business but, many of their investors appeared to say that their funds anonymously disappeared and they are unable to track the status of their funds. Which clearly states that the BitKRX has stolen and run away with all their client’s funds.

Like BitKRX, there are various ways through which the Cryptocurrency scams can take place. Some of them are mentioned below with some brief explanations:

ICO frauds-

ICO (Initial Coin Offerings) is the most common way by which the scammers create a market hype and false promises about a particular project and raise huge funds from the large number of investors online. In return they run away with those funds without offering the returns as promised.

Shady Exchanges-

Shady or fake exchanges are the ones who jump overnight with the intension on online exchange of Bitcoins pretending to be lawful and legitimate entity. Once the investors have deposited the coins there is no guarantee whether he will receive it back or not.

Fake Wallets-

Fake wallets are available for androids which can be downloaded from Playstore but consist of high risk of fraud as there are so many random wallets available which are illicit in nature and once registered, they can misuse your personal information and seed. Hence it is advisable to choose the secured wallet.

Artificial Traffic-

As the name suggest, this trading platform uses bots which makes large number of artificial transactions which creates an image in the mind of investors that large number of people are using this platform and is secured. Little do they know that it is just an imaginary transaction created artificially.

Pump and Dump-

Pump and Dump is all about manipulating the prices of altcoins. The person planning the scam makes everyone buy and sell Cryptocurrency and raises the price and drops it. It does not take more than few seconds and the scammer gets benefited while others lose.


How to recognize a Scam:

After understanding various types of scams, it becomes important to recognize how the scams happen and how one can prevent itself from falling in this trap. Several factors should be kept in mind before trusting any entity. Looking for the early warning signals before investing can be helpful like:

  • Whether the firm is authorized and had all necessary licenses.
  • To look for the experiences and reviews of the investors regarding the particular trading platform.
  • By checking the address of the firm and their previous projects.
  • If the company is providing all what it has promised.
  • To check the social media accounts and database of the company

Apart from all these points, there are several other things which helps to recognize a scam. Although scam is not a new thing in these industries, but it is advisable to all the investors to self-educate themselves and do in depth research before investing.

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