How To spot a Crypto Scam (Exchanges, Coins/Tokens, Social Media)

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With crypto booming and lots of people having double digit profits scammers will try to take advantage of unknowing/new investors. In this guide I will discuss the most common crypto scams out there and where to look at.

1. Fake Exchanges/Wallets/support:

If you want to get some crypto, you have to go to an exchange. Most exchanges offer some type of promotion for their customers from time to time incentivizing them to trade. There are scammers out there who create a seemingly legit looking exchange and try to lure in new customers with 'bonuses' which are too good to be true like 'get 0.1BTC for free!'. To get this bonus you usually have to deposit first to 'unlock' the free coins. Once you deposit on that exchange your money will be gone, even though it looks like it's still there. Sometimes scammers copy wallets from legit coins and get the app listed on the Google play store, when you put in your seed phrase or deposit you're handing over your wallet to them. To draw attention to their fake exchanges/wallets scammers sometimes use fake support members pretending to be from Binance or another large exchange on social media.

To prevent getting scammed by these methods do the following:

  • Never disclose your private key!
  • Don't click on emails containing suspicious links
  • Double check the URL
  • Don't interact with 'support members' on social media, use the official support line (from reputable exchanges)
  • Go to the official site of the coin you want to buy, they almost always recommend using a certain wallet.

2. Phishing:

Thanks to technological developments phishing scams are largely prevented by parties like Google filtering out spam email, but some can slip through the crack. Never interact with emails or other messages you receive seemingly coming from a large exchange asking you to login because of a problem or them asking for your private key, exchanges will never do that!

3. Fake ICO's/Airdrop scam:

An Initial Coin Offering is a type of crowdfunding to get a new crypto project released with a claim that in the future the early investors get their tokens. One report found that 78% of ICOs in 2017 were scams. With DeFi booming crypto Twitter and other social media have turned into a cesspool for scammers trying to lure people to their fake new DeFi projects. These scammers use social media to their advantage, promising people free coins (Airdrop) in exchange of them spreading the word around.

How to prevent getting scammed:

  • Do thorough research into the newly released coin; How does the whitepaper look like? Is there an active team? What's the point of this new coin?
  • If the coin asks you to 'spread the word' in exchange for free coins, it's likely to be a scam.
  • Does the coin only have a Telegram or some other socials and is the team anonymous? Avoid at all costs!
  • Check sites like "ICOdrops", they usually provide a lot of information about new coins.
  • Research research research, don't trust it? don't buy it!

4. Impersonation giveaways:

This might be one of the easiest scams to point out, scammers pretending to be celebrities to lure you to their fake exchange or 'double' your coins. They use an army of bots to make it legit so be careful when you see anything like this on social media.

5. Pump and Dumps:

in the unregulated world of cryptocurrencies market manipulation is quite common. There are social media groups with thousands of people pumping a seemingly dead coin (low liquidity is easier to pump) to quickly after crash it again. Never join one of these groups, you will very likely lose a lot of money! The creators of the group make the calls so they can dump their bags on you. Keep an eye out of a coin that suddenly gets hyped a lot with a lot of trading volume, it might be involved in a PnD.

6. Ponzi and Pyramid schemes:

We all remember Bitconnect and its downfall, the largest crypto ponzi we had till date. Ponzi's move money from new investors to older investors, they lure in new investors with the promise of a high return. Usually people encourage each other to put money into it, but that can only go on for so long. Once there's no new people buying into the ponzi or the creator is done with it the house of cards collapses.

How to prevent getting scammed:

  • Never buy a coin that promises (guaranteed 10x this year) or brags about the returns they have ''Up 11,500% in 129 days, yes I'm looking at you HEX''.
  • Check the coin for functionality, does it even do something or is it just giving out money to its investors?
  • Research research research, don't trust it? don't buy it!

7. Malware:

Once malware has infected your personal device its fairly easy for criminals to watch everything you type in, all your personal information (keylogger). Another type of malware is very rampant now, the clipboard replacer. When you want to send crypto, this malware replaces your address (which you copy pasted) with the address of the scammer.

How to prevent getting scammed:

  • Use antivirus software on your personal device, they're fairly good at detecting dangerous programs
  • Never download stuff from a sketchy source, always use the official way.
  • Double check before you send crypto, is it really your address?
  • Use a hardware wallet: ''One of the main benefits of a hardware wallet (I suggest either Ledger or Trezor) is that they can operate on a computer with malware but will still keep your private key secure because it's on a separate device that the OS has no access to. And you need to press a physical button to send out funds and can review the receiver address directly on the hardwarewallet to make sure it wasn't replaced by some malware'' – btc_clueless (thank you for the comment!)

I tried my best to cover all the cryptoscams out there, if I missed anything or you feel like it needs more information leave a comment!

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