In this article, I am going to tell you about Typical Fraudulent Schemes in the Cryptocurrency Market. so if you want to know about it, then keep reading this article. Because I am going to give you complete information about it, so let’s start.
The cryptocurrency market is where people buy and sell digital assets like Bitcoin and Ethereum through online exchanges. Cryptocurrencies are not controlled by any government or financial institution, and their prices can change quickly. While Bitcoin is the most well-known cryptocurrency, there are many others with different features and uses. Investing in cryptocurrencies can be risky, but some people see it as a way to make a lot of money.
Today’s article focuses on the same, i.e., “Typical Fraudulent Schemes in the Cryptocurrency Market” The articles entail each bit of information necessary for you to know.
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Table of Contents
Typical Fraudulent Schemes in the Cryptocurrency Market
Fraudsters appear everywhere where it smells of easy and big money. The young cryptocurrency market is just the perfect environment for financial fraud. The damage from the activities of scammers is estimated at billions of dollars. In addition to direct material losses, they also cause reputational damage, which undermines the credibility of cryptocurrencies.
1. Pump and dump
The cryptocurrency market was created in the image and likeness of time-tested financial markets. Along with many valuable developments, the new market inherited old-fashioned fraudulent schemes.
The essence of the “pump and dump” technique is that the investor buys a large amount of an asset at a very low price. In addition, large investors can count on discounts. Large purchases provoke an increase in prices. Having bought a sufficiently large amount of an asset, the buyer becomes a seller and sells all his stocks.
Although these schemes have long been outlawed, they are still common in the crypto world. Many scammers buy small market cap tokens at ridiculous prices and actively promote them on social media.
To push the price of the token up, it is enough to captivate several thousand people with the idea, among which there will certainly be those who will change a large amount of LTC to BTC in order to buy a dubious asset. When the passion for the growing token reaches its maximum, the attacker will dump his investment.
2. Pulling the rug
This is an even more extreme version of the “pump and dump” scheme. The essence is generally the same, but more advanced characters are engaged in pulling the rug, who do not buy up tokens, but launch a cryptocurrency project themselves and continue to act according to the classical scheme.
Due to manipulation, the price of a cryptocurrency can fall by more than 99%. Usually, the damage is massive. In addition, some “carpets” are coded in such a way that victims who have invested their money in cryptocurrency cannot sell it at all. In the crypto world, this scheme is quite common. One of the most powerful ways to avoid the trap is to only invest in crypto projects that have been independently verified by a trusted third party.
3. Phishing
Another classic scam genre is phishing. This scheme thrives in many ways, but it is especially persuasive in the realm of cryptocurrencies. The essence of phishing is that an email or text message is sent to you with a link to a website that you visit frequently. Usually, the message says that you need to sign in urgently because your account is being hacked.
Although the emails may vary, they all ask you to sign in somewhere, and promptly. The link leads to a fake page, almost indistinguishable from the original, and as soon as you enter your login details, they are in the hands of attackers. And believe me, they will not hesitate. Exchanging your SAND to ETH and withdrawing in an unknown direction is already a matter of technology.
Phishing sites differ from real ones only in minor details in the URLs, which are easy to miss. Scammers are very creative, so you should always double-check the URL before entering your sensitive information.
4. Fake tech support
This scam spread in 2017, and while people are now aware of it and rarely fall for tech support tricks, it’s still important to be aware of this type of scam.
If you ever get a popup message or other notification about some kind of error saying that the only way to fix it is to call the number listed, don’t call.
Usually, this number simply redirects you to a call center in another country, where the scammer will try to get every possible detail from you during the call.
When it comes to crypto scams, scammers often pose as employees of various crypto exchanges. In some cases, they manage to get hold of people’s wallets, crypto exchange accounts, and other financial information. They may also call you first, so never trust anyone who says they are calling on behalf of any cryptocurrency exchange you use.
5. Celebrity use
Influencers and cryptocurrencies are 21st-century phenomena, so it makes sense that they can go hand in hand, right? But only sometimes. From the very beginning, brands have attracted influencers to promote their own products. Now this technique is used to promote certain crypto projects.
However, the promotion of the project by an influential person is not an indicator of reliability at all. A movie or sports star is not a deity, but exactly the same person as you, with exactly the same weaknesses, but more famous and richer. Sometimes influential people themselves do not even suspect that they are promoting fraudulent projects.
There were precedents and the conscious participation of stars in the promotion of fraudulent cryptocurrencies. It is important to understand that famous people can also do bad things. If you are interested in a project that promotes known man, do not be too lazy to further study it yourself.
Conclusion:)
There are many ways to scam cryptocurrencies, and even the smartest people are vulnerable. It is important to understand that most criminal schemes existed long before the advent of cryptocurrencies. Whenever money is involved, scammers are inevitable.
All investment decisions should be made carefully. Remember that investing in any form of assets, including cryptocurrencies, carries risks and it is not worth investing more than you can afford to lose. Ideally, you should have a well-balanced investment portfolio to reduce risk and increase potential returns.
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