How to Spot a Crypto Coin Scam


A common cryptocurrency scam capitalises on the obsession of the cryptocurrency community with finding the next hot thing. During last year’s crypto boom, new tokens saw enormous gains on short-term momentum and hype. Today, investors scour trending assets and top gainers hoping to catch the next “meme coin” before it soars. Unfortunately, these scams are not as easy to detect as they sound.

Young man mining bitcoins at home
ICOs are a way for start-up crypto companies to raise money from future users

In 2017, ICOs became a major fundraising event in the crypto world, with 342 new tokens being issued. These tokens raised a combined $5.4 billion, with the top three raising the most money: EOS, Telegram Open Network, and Bitfinex. Among these, the ICOs of Storj raised $20 million and made it one of the most successful crowdfunding campaigns of all time.

To raise money through an ICO, start-up crypto companies must first attract investors. They should create a white paper that outlines the objectives and future plans for their cryptocurrency project. This initial information is intended to attract investors and create buzz within the industry. Once they’ve garnered enough interest, they can begin marketing the ICO and setting a date for the initial sale.

ICOs work similarly to IPOs. During a crowdsale, start-up crypto companies create digital tokens that they sell to users. Participants of the crowdsale purchase the digital tokens in exchange for bitcoin or Ethereum. They then receive the funds they invested back. This process allows crypto companies to expand into the wider world. When an ICO goes well, investors can reap benefits from the project’s growth.

In addition to IPOs, ICOs are an excellent way for crypto companies to launch bold new ideas. ICO funding comes with a thriving community of individual investors who share the products they back and generate buzz. The potential is enormous. So, it’s important to know when to invest and when to exit. There’s no better time to make your next big move than now.

ICOs are not for everyone. But the majority of the companies that conduct an ICO use the ERC-20 token on the Ethereum blockchain. Because of the ERC-20 token standard, a non-technical founder can issue tokens and collect funds with relative ease. As a result, the process is comparable to that of starting a web shop. ICOs lower the barriers to funding for non-technical people, regardless of background.

Bitcoin gold coin burning, burning cryptocurrency BTC investment falls, online currency value loss, fire PHOTOMONTAGE

Most ICOs are used to fund the development of new products. Many startups sell utility tokens that represent access to new services or products. Utility tokens are often listed on cryptocurrency exchanges. A few examples of startups using this model include Swiss blockchain startup Orocrypt, Irish blockchain startup Cloud With Me, and Protocol Labs. As with any other crowdfunding project, ICOs are a great way for crypto companies to gain access to new investors.

However, the SEC has ruled that some ICOs are securities, and has taken action against some of the unregistered ICOs. As a result of the SEC’s focus on ICOs, some crypto project founders changed the structure of their ICOs or even ceased the process altogether. This has led to a huge spike in scams.
They’re also opportunities for scammers

Scammers prey on the excitement surrounding the potential for cryptocurrency to be a lucrative investment option. They can pose as well-known celebrities, businesspeople, and cryptocurrency influencers to lure unsuspecting victims into transferring their money. Scams commonly promise to match or multiply cryptocurrency transfers. They often use well-crafted social media messaging to generate a sense of urgency and legitimacy. Using a mythical “once-in-a-lifetime” opportunity, they lure in people into transferring their money to them.

Despite the high level of interest, the unregulated nature of cryptocurrency means that it is an easy target for scammers. One example of a recent scam involved new cryptocurrency token SQUID. It was an immersive online game. The developers of the “Squid Game” vanished after the currency skyrocketed in value, presumably cashing out with $3 million. Similarly, a recent study found that more than 40% of crypto scam victims had their money stolen by scammers on social media.

Scammers spread rumor about new cryptocurrency coins through social media and forums. They may use unauthorized images of high-profile businesspeople and celebrities to create legitimacy. They may also promise free cash in exchange for your money. To avoid falling victim to such scams, you must maintain a healthy skepticism. In addition, never transfer money to anyone who approaches you. The best way to avoid falling prey to cryptocurrency scams is to be vigilant and do your own research.

Phishing attacks are an age-old scam. Phishers send emails to lure people into clicking links. By entering the details of a crypto wallet on the fake site, they can steal your money. As a result, it is important to double-check URLs and never click suspicious links. It is important to be vigilant about scams and report any suspicious activity to law enforcement agencies. This will prevent such scams from spreading and becoming widespread.

Initial coin offerings are a common way for start-up cryptocurrency companies to raise funds. Scammers often target the unsuspecting public with a “pump and dump” scheme. Scammers often promise investors 1,000% returns within a short period of time in exchange for sending their active crypto coins. The ICO can also be a variation of the classic pump and dump scam, whereby fraudulent projects artificially raise the price of their shares and then dump them at an artificial peak. They often use false claims to hype demand and allow dominant holders to make massive phony profits.

While speculative trading is illegal in traditional securities markets, it is quite common in the cryptocurrency world. In fact, several online groups have emerged dedicated to this particular practice. Using your savvy resources to avoid speculative trading scams is one of the best ways to stay ahead of the game. These speculators usually take advantage of people’s enthusiasm for cryptocurrency, while the scammers use the opportunity to gain huge profits.
They’re complicated to detect

There are several ways to identify crypto scams. Often, the scammers impersonate reputable companies, such as Amazon, Microsoft, FedEx, or banks. Other ways to spot a crypto scam are through pop-up alerts or social media pages. However, scammers are generally difficult to identify. If you’re not sure how to spot a crypto scam, keep reading to learn more about how to spot it.

Pump and dump cryptocurrency scams involve a group of traders inflating the hype by spreading false information. Then, they sell off their shares unethically at the top of the market. They then bolt. Another common type of cryptocurrency scam involves an imposter, who poses as a celebrity, government official, friend, or family member. The scammer will then ask for cryptocurrency, which is usually transferred to the imposter’s wallet.

These scams can be difficult to detect, especially because cryptocurrency transactions are recorded and verified by the blockchain technology, which can be thought of as a digital ledger. As a result, they are very difficult to trace. Many people who have fallen for these scams do not have any prior knowledge of cryptocurrency. So, despite the difficulty of detecting crypto scams, the government has started investing in software that analyzes cryptocurrency movements to make these transactions easier and more transparent.

Be wary of get-rich-quick scams. These scammers often use social media to promote their schemes. They might use unauthorized images of high-profile businesspeople to give the impression of legitimacy. They might also promise free money, so keep a healthy skepticism when investing in crypto. Avoid cold calls and do not trust anyone who claims to know better. You should also be wary of celebrity endorsements of crypto investment schemes.

The rising popularity of cryptocurrencies has also prompted a surge in the number of cryptocurrency scams. The prices of cryptocurrencies have attracted uninformed investors. This has led to more fraud and fake ICOs. In addition to the lack of transparency and traceability, cryptocurrency transactions are completely irreversible. Therefore, the scammers often disguise themselves as experienced professionals. These scammers are often difficult to spot, but if you know how to spot a crypto coin scam, you can stay away from them.