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Online scammers seem to be moving faster than expected as crypto scams 2022 seem to be on the rise. These scammers are now using technologies in carrying out crypto scams 2022 without looking at the consequences of their actions.
While many have made fortunes through crypto investments, a good number of investors who dabbled into crypto without carrying out their due diligence lost more than their life savings while trying to make millions out of crypto.
In today’s discussion, we will be looking at common crypto scams that have ruined the lives of many crypto investors in the past. We will be outlining various means you can use to spot and avoid such projects.
What Is A Crypto
A crypto scam is a type of investment fraud whereby criminals steal money from unsuspecting investors. Here, the investors who are hoping to invest money into a new crypto project are tricked into investing their money into such a project while the criminals behind it steal the funds and disappear. Usually, these criminals work in groups.
How Are These Crypto Scammers Able To Carry Out Such Heists?
Crypto scammers can penetrate the crypto world and carry out heists because most crypto-assets and related services aren’t regulated by the Financial Conduct Authority (FCA).
So basically, in the crypto world, everyone is on their own. It is a two-way thing. When you carry out thorough research before making any crypto investment, the likelihood of making a profit is certain but when one makes a blind investment, the likelihood of falling into the trap of crypto scammers is certain.
Crypto Scams 2022: The Three Common Crypto Scams In 2022?.
In the Crypto business, there are two ways of making instant quick cash. The best but riskier way is to invest in what we call “Shit Coins” (Shit coins are newly formed projects which have no traceable owner). These shit coins can make one extremely rich and extremely poor at the same time. The second way of making instant cash in crypto is, investing in any good project while bitcoin is going up. This requires you to invest a huge amount of money to make a good profit instantly. This second tactic is possible because whenever bitcoin is gaining, every other good project also goes high depending on how good such a project is.
If you’re thinking about putting your money in cryptocurrencies, NFTs or so-called decentralized beware of these common scams.Rug pull
Rug pull happens when a startup or influencer promotes a crypto token by soliciting funds through public investment with the sole aim of vanishing with people’s cash or stops updating the project immediately he is in control of the funds. Usually, these scammers work in groups. They spend money developing the project with the sole aim of escaping with people’s money.
One recent project that rug pulled was Metano.Finance. This group of developers, influencers who work with Telegram influencers such as the popular BNB Bomb Group, vanished after the telegram group helped create awareness for their project.
So before you invest in any crypto project, beware of this crypto scam called rug pull.
Pump and dump
The second crypto scam prevalent today is what we call Pump-and-dump schemes.
How is this done?.
The philosophy behind Pump and dump is a simple one. These scammers do this by artificially inflating an asset’s value by making misleading statements and publishing misrepresenting investor demands. These schemes are especially common with newly developed, small, or obscure cryptocurrencies. They can persuade unsuspecting investors into believing that the market value is good by pushing out false narratives. Their motto is usually, “Come in as an early bird, and make fortunes”.
Although most U.S. states, as well as the federal government, prohibit similarly manipulative stock market scams, crypto investors continue to lose millions to pump and dump projects.
How Is This Done?.
The people behind these scam projects get influential individuals in society who are most times paid to advertise the project. These promoters or celebrities say things that are untrue and at the end of the day, investors lose their money.
An example of this is EthereumMax, a cryptocurrency promoted by Kardashian that recently shot up in valuation after her endorsement, then quickly tumbled. A group of investors who felt cheated, earlier this year filed a class-action lawsuit naming Kardashian, boxer Floyd Mayweather, basketball player Paul Pierce, and others, alleging the celebrities received payments to promote the token by claiming early investors could “make significant returns” from purchasing the currency”.
This is usually the format these types of scam schemes take. So when you want to invest in crypto, do thorough research. Do not rush into investing because a certain celebrity’s face is behind such a project.
One age-long scam that doesn’t seem to be going behind the scene anytime soon is what we call, “Wash Trading”.
Here, the buyer and seller of an investment collude to artificially inflate its value and make it appear as though there is significant outside interest. Most times, the buyer and the seller are the same people operating two different accounts. The seller places the item and buys the same product using another account.
This bizarre practice was banned by the Commodity Exchange Act in 1936, and the IRS prohibits taxpayers from deducting losses from wash trading but yet, wash trading has continued in the crypto world to date. These wash traders can carry out this heist because some of the most prominent crypto wallets don’t require users to verify their identity. So they can easily make multiple accounts that they make use of in carrying out these crypto scams.
In conclusion, beware of these common crypto scams 2022 if you truly don’t want to become poor as a crypto trader. The crypto world is volatile and full of scams. These scammers can penetrate because governments seem uninterested in regulating crypto transactions.