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How to detect and avoid scammers in cryptocurrency

9 min read
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The growth of blockchain and therefore the cryptocurrency space is fascinating. Technical innovations and therefore the rapidly evolving new trading paradigm still attract large crowds, but this also includes several scammers.

Various cryptocurrencies have created millionaires over the years. they need established themselves as a profitable enterprise for all those that want to take a position within the future.

However, this growth in value and therefore the adoption of core business has had some consequences. While people with good intentions seek to take a position and possibly make a profit and be a neighborhood of shaping future money, some criminal elements tend to deceive their investments.

Potential investors often refrain from investing during this growing industry thanks to the steady increase within the number of cases where people lose their cryptocurrencies due to fraudsters and thieves. Older investors also are avoiding these investments.

We have brought together six common cryptocurrency scams and the way to avoid them.

At the top of this review, you ought to be ready to quickly identify common fraud tactics and methods employed by most scammers.

Types Of Scams

Fake ICOs

The easiest thanks to conduct a scam is to create and market a fraudulent Primary Coin Offer project. ICO has become an important way for legal businesses to seek out the required funding through crowdfunding.

Many fraudulent ICOs write a white book , develop a marketing campaign on social networks, post token information on stock exchanges, and conduct a fake sale of tokens.

Thus, many new investors are deceived by the promise of earning 1000% of the take advantage of these ICOs and find yourself buying useless tokens.

In a study conducted in 2017, 80% of ICOs were identified as fraud. a well-liked one was Confido.

In November 2017, they raised $375,000 and shortly then disappeared. As soon because the news spread, the worth of the coin fell from $0.60 to $0.10 in but 2 hours. It then changed to a fraction of a percent after a couple of hours.

Even larger scam ICO was Centra, which raised $32 million and was supported by celebrities DJ Khaled and Floyd Maver. In April 2018, the 2 founders were arrested, and, like Confido, the coin lost most its value after the news release.

How it works:

  • The user becomes a part of the ICO telegram group.
  • The user will receive messages from what seems like an administrator from the ICO command, but they’re not.
  • They offer users a personal bonus purchasable . for instance, if an ICO bid is 1 ETH = 10,000 tokens, they provide 1 ETH = 30,000 tokens.
  • Then scammers ask interested users to transfer the ETH to a different address, a “special address.”
  • Once the user transfers funds, the scammers disappear.

How to avoid it:

  1. Check Whitepaper Quality – Are the promised returns too good to be true? Is it filled with mistakes?
  2. Is there a legal roadmap for the token and proof of concept?
  3. Ask challenging questions on the project – Does the team ignore or answer your questions?
  4. Check the exchange on which the coin is indicated – Does it have a big trading volume?
  5. Share and discuss it with friends or community – Ask them if they think it’s a fraud.
  6. Cloned Fishing Websites

It’s important. The above scammers are often avoided with little vigilance. However, phishing attacks are challenging to detect.

These users share sites that look exactly just like the original site or a fresh site that captures your tip then uses it to hack into other accounts.

Accurate clones of legitimate projects, typically exchanges or ICO sites, are wont to steal funds and private information.

Always double-check the URL and bookmark the websites you visit frequently. Cloned sites will use similar letters within the URL to form it appear as if the important URL initially sight, for instance, using “m” rather than “n,” “0” rather than “o,” then on.

How it works:

  1. The fraudster sends you a link to the location, counting on the context of the conversation. Example: He says that if you’ve got a drag with Binance, log in using this link. This site looks exactly like Binance but has nothing to try to to with it.
    The cheater will ask the user to undertake this new exchange.
  2. In both cases, you enter your user registration or login details. These credentials are then wont to access other user accounts, where security is minimal. The user account has been compromised.

How to avoid it:

Everything may look normal on the surface. No one’s fooling you to send crypto. Someone’s telling you to undertake a replacement exchange or give feedback on the location. You don’t see anything wrong, but in the end, you get cheated. This scam may be a little more complicated than that.

Follow these steps to avoid getting cheated:

Do not click on unrecognized links.
On all sites you visit, check the link within the address bar and confirm it’s correct. Keep an eye fixed on the special characters.
Fake Support Teams

Another sort of phishing campaign is when these groups pretend to be a project support team and request personal information, deposits, or personal passwords.

When you have a drag with the stock market, you are trying to urge answers to your questions from their telecommunication groups or their administrators. These scammers are hunting such users.

How it works:

  1. The user is faced with a drag related to such exchanges as Binance, Bitbns, Koinex, WazirX, Coindelta, et al. .
  2. Fraudsters use similar usernames, an equivalent image, and display name because the administrator of the group telegram exchanger
  3. or use the brand of the exchanger itself.
  4. Users confuse them with the exchanger and trust them.
  5. Fraudsters ask users to send BTC or ETH to “fix the matter .”
  6. Users send the quantity within the hope of solving the matter.
  7. Scammers run away with this amount and can never be seen again.

How to avoid it:

  • When it involves exchanging, keep to Binance, Kraken, Bitfinex, Kucoin, Huobi, Bibox, Coinbase, and Gemini.
  • At the time of writing, CoinMarketCap lists 204 exchanges, and there’s a robust possibility that among them is another BitKRX.
  • Also, keep track of the legitimacy of applications that you simply download to your phone or browser.

Fake Pools And OTC Scams

Off-exchange transactions are distributed in the correct cryptocurrency. You do not have an intermediary. The transaction is at a fixed price. Fraudsters can cheat trustworthy users again by providing incredible prices to buy or sell cryptocurrency.

Fake pools are usually organized with the help of a telegram or group chats “Discord.” These groups offer allocations for upcoming ICOs and ask you to send funds, usually Ethereum, to contribute to the pool to receive ICO tokens later on.

Although some of these groups are legal and are generally tough to get into, they may even require a steep monthly fee, KYC, and a certain skill set, most of them are just scams.

Also, due to the anonymous nature of cryptography, once you send money to a fake pool, there is no way of getting a “refund.”

How it works:

  • The fraudster addresses users with a Bitcoin trading offer.
  • They usually offer a 5-10% surcharge on current prices to attract users.
  • From there, they go in two ways – first, they ask to send crypto, or they send a fake NEFT receipt to show the payment and ask to send crypto first.
  • Once the user sends the cryptographic data, these users delete the account and disappear.

There are many more options for these scams. Once, to check the conman’s stability, I asked him to send me his ID. He shared his passport (read: fake).

Later he sent me his bank account details as well as his NEFT receipt to show that he had made the payment. Since the NEFT transfer takes half an hour, it becomes a common decoy to lure people into cryptography. I didn’t transfer Bitcoin, and in the end, he realized that I didn’t fall into his trap.

How to avoid it:

Do not exchange OTC messages by telegram or anywhere else unless you know who the person is. There are several peer to peer exchanges, some without KYC, so trade there. Don’t be greedy and go for over-the-counter transactions when someone offers a premium rate.

Pump And Dumps

Groups of pumps and dumps manipulate the worth and volume of a coin – usually less known coins. Initially, they pump the worth during a short period, coordinating the acquisition of huge volumes, then sell it by dumping.

The catch is that these groups have different levels, and therefore the higher levels tell which coin only swings to lower levels once they have already bought it.

These groups manipulate the costs of coins with low market limits. It creates a “fake agiotage” for a digital token. it’s done by unrealistically increasing its value and trading volume before you’ll make an honest profit out of it.

Traders who act first take profits and other people who are a touch late suffer from the sharp drop by prices in only a couple of minutes.

They often add “Telegram” or “Slack” groups. Although it seems to be a chance to form quick money, in most cases, regular traders are slower than these groups, which illegally manipulate the market.

How to avoid it:

  • Do not participate in these groups (even if they contact you on social networking sites).
  • Be careful with tokens that have a sudden and immediate surge in trading volume.
  • Typical Red Flags
  • Promise Astronomical Gains

In many cases, if it sounds too good to be true, it’s probably not true. Simply put, always suspect any project that gives a high return on your investment.

You Have to ask More Users

Doubt and suspicion: When asked to ask other users, this is often a transparent sign that this is a Ponzi scheme. confine mind, though, that affiliate programs are different and always voluntary.

They invite Your Private Passwords

Never share your passwords, private keys, or security phrases. a person, project, or ICO that asks for your passwords, private keys, or security phrases is fraudulent.

Previous Scam

A scam will always be a scam. If a project, startup, or individual has been accused of fraud within the past, take care, as they’ll become fraudsters again.

Project Team

Do not trust the articles or the project site. It’s critical to see that the team has LinkedIn profiles and possibly transcend that, also as do a full background check using Google and Twitter or Facebook. If the knowledge about the team isn’t public, there’s a robust possibility that it might be a fraud.

How To Evaluate The Legitimacy Of ICOs


  1. Are there full names and persons related to the project?
  2. Do they need active LinkedIn or other social media profiles?
  3. Is the white book the first or a replica of another white book?
  4. Are there verified partnerships with other companies?
  5. Does the organization have a roadmap, a working product, or is it just an idea?
  6. Are they a registered and merged company?
  7. Read honest broker reviews on the web site That Sucks.


If the project is abandoned, it’s not worth some time and money.

What do people say about this organization on various social networks?
Does the team connect with the community, and what’s their attitude?


Not everyone needs a blockchain.

Do you need a blockchain, or can the matter be solved with a classic database?
Does the technology behind this project solve the problem?
Is there another organization that’s trying to unravel an equivalent problem?


  • Does the organization have a transparent goal?
  • Has the team met the deadlines within the past and achieved the goals that began within the road map?
  • Did the team have any problems during the event, and the way did they affect them?
  • Has the coin skilled the pump and dump before?
  • Have there been recent changes within the team structure?
  • To Sum Up

After all, despite the various scams, schemes, and performers of varied fraudulent activities throughout the cryptographic space, the simplest approach may be a reasonable degree of skepticism and caution.

Despite the number of fraudulent projects, there are countless respectable and well-managed organizations and groups that make investments in cryptographic currency at cost.

So, there you’re, now you’re smarter regarding scammers. A warning is best than a cure. If you’ve got been cheated, there might not be any cure for returning your money, so take care.

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