The world of crypto assets is not immune to the tactics of malicious actors, as revealed by Dami-Defi, a prominent crypto influencer, when three of his friends fell into the trap of crypto scams. He recounted how his friends’ wallets were hacked, resulting in the loss of a significant sum of US$25,000.
In response to such incidents, Dami-Defi took it upon himself to share five common crypto scams and how to evade them:
Fake Websites/Applications
A prevalent fraud involves counterfeit websites or applications that imitate popular decentralized exchanges (DEX) like UniSwap. Unsuspecting victims are tricked into connecting their wallets to these malevolent platforms. The offenders gain unauthorized access to the victims’ accounts and drain their funds.
To safeguard against such scams, traders are advised to visit reputable sources like CoinGecko and access exchanges through the Exchange section.
Pump and Dump Scheme
Another frequently occurring scheme is the pump and dump, wherein a prominent figure or influencer purchases an asset and promotes it on social media. Fear of missing out (FOMO) is commonly exploited to entice followers to invest impulsively, leading to a surge in the coin’s value.
Once the price has peaked due to increased asset purchases, the scammer sells off all their holdings, resulting in significant price drops and losses for those who bought during the pump.
To avoid falling into this trap, users are encouraged to exercise caution with influencers, particularly those who push for buying and “HODLing” until a specific price point or market capitalization is reached.
Initial Coin Offerings Fraud (ICO)
Initial Coin Offerings (ICOs) are seen as an opportunity to invest in new coins at a discounted rate before their public release. Unfortunately, this space is also rife with fraudulent activity. Some ICOs promise unrealistic returns but fail to deliver on their pledges.
To steer clear of deceptive ICOs, potential investors should conduct thorough research by checking a project’s social media accounts, community engagement, and reviewing their roadmaps and tokenomics. Additionally, evaluating the quality of partnerships can serve as a valid indicator of a legitimate ICO.
Honeypot Scheme
The Honeypot scheme involves fraudsters monitoring large wallets and sending fraudulent tokens to deceive observers into investing in fake projects. These transactions are displayed as “received,” enticing unsuspecting investors.
To protect themselves from falling into the Honeypot trap, traders and investors are advised to avoid investing small amounts of tokens, particularly in the range of US$200 to US$5,000, unless there is a compelling reason to do so. Furthermore, caution must be exercised when dealing with “received” tokens unless the amount involved is significant or part of an over-the-counter transaction (OTC).
Giveaway Fraud on Social Media
Social media platforms have become breeding grounds for giveaway fraud, where fake accounts promise significant returns in exchange for crypto transfers. Fraudsters often initiate their schemes by luring victims and their wallets to suspicious applications under the pretext of attractive gifts.
To protect against this type of fraud, it is crucial not to send assets to anyone promising substantial returns. Additionally, users should avoid connecting their wallets to suspicious platforms that claim to facilitate prize withdrawals. Vigilance and skepticism are paramount in such scenarios.
By staying informed and vigilant, traders and investors can minimize their exposure to crypto scams and protect their hard-earned assets.
