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A 53-year-old engineer from Bengaluru has recently been ensnared by a cryptocurrency scam, resulting in a financial setback of Rs 95 lakh. The swindler managed to persuade him to invest in bitcoins by guaranteeing substantial returns. Here we explain what is a crypto scam and things you can do to avoid one.
What is a crypto scam
A crypto scam is a fraudulent scheme designed to trick investors into parting with their cryptocurrency or personal information.Scammers employ various tactics to exploit the allure of quick gains and limited knowledge surrounding the relatively new and complex world of cryptocurrency.
Here are some of the most common types of crypto scams
What is a crypto scam
A crypto scam is a fraudulent scheme designed to trick investors into parting with their cryptocurrency or personal information.Scammers employ various tactics to exploit the allure of quick gains and limited knowledge surrounding the relatively new and complex world of cryptocurrency.
Here are some of the most common types of crypto scams
- Pump-and-dump schemes: Scammers artificially inflate the price of a cryptocurrency through coordinated buying and positive publicity, then abruptly sell their holdings, crashing the price and leaving unsuspecting investors with worthless tokens.
- Fake ICOs (Initial Coin Offerings): Fraudulent ICOs lure investors with promises of high returns on a supposedly revolutionary new cryptocurrency project. However, the project often turns out to be non-existent, and the funds raised disappear.
- Phishing scams: Scammers send emails or text messages disguised as legitimate cryptocurrency exchanges or wallets, tricking users into revealing their private keys or login credentials. Once obtained, scammers can steal the victim’s cryptocurrency holdings.
- Ponzi schemes: These schemes promise high returns with minimal risk, but in reality, they rely on recruiting new investors to pay out earlier ones. Eventually, the scheme collapses when it becomes impossible to attract new members.
- Rug pulls: In a rug pull, scammers create a cryptocurrency and hype it up, then suddenly abandon the project and take all the invested funds with them. This leaves investors holding worthless tokens.
Tips to avoid a crypto scam
- If it sounds too good to be true, it probably is. Be wary of any investment that guarantees high returns with little or no risk.
- Be cautious of projects with excessive hype and promotion, especially if the underlying technology or team seems vague or unproven.
- Scammers often create a sense of urgency to pressure victims into making quick decisions without proper research.
- Only invest in cryptocurrencies through reputable and licensed exchanges or platforms.
- Be wary of projects with poorly written materials, grammatical errors, or unprofessional communication channels.
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