Beware of these crypto scams

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What you need to know A quick overview of the most common scams and how to avoid them. A scam capitalized on the hit TV show “Squid Game”. Remember, there is no FDIC or SIPC to protect you.

The field of digital assets is new, confusing, famous for making people rich – and often unregulated. In other words, it’s a perfect framework for scams.

Here is an overview of the most common scams and how to avoid them.

The pull-out carpet

A new coin, token, or platform appears, makes big promises, advertises a lot, attracts investors, and then disappears.

A recent example was a new cryptocurrency whose promoters capitalized on the hit TV show Squid Game. After quickly hitting $ 2,860, the Squid coin fell to near zero in just a few hours. The coin’s anonymous creators drained cash from the product, lowering its value, and came out with $ 3.3 million in investor money.

What your peers are reading

Watch out for new parts that make a lot of noise.

Pump and dump

Much like Stratton Oakmont, Blinder Robinson, First Jersey Securities, and other notorious penny stock brokerage firms of the 1970s and 1980s, pump and dump con artists also thrive in the crypto world.

In this trick, scammers buy (and sometimes even invent, like the carpet above) a nearly worthless coin and then build excitement about it, causing reckless investors to buy the coin. The crooks keep the excitement going by making additional purchases, and soon the price increases dramatically. At this point, the crooks empty their holdings and stop promoting the coin. The resulting void causes the price to collapse, leaving everyone else with a worthless asset.

The pump and dump programs often involve influencers and celebrities who get paid to endorse the new piece. Their credibility helps give the scam credit – until it’s too late. If a coin or token is being heavily promoted, consider whether a scam might be going on before investing.

Phishing scams

Phishers email you to let you know of an incredible investment opportunity. If you click on the link, you will be taken to a website that looks legitimate and asks you to send money. After that, the website disappears. Sometimes the crooks don’t even want your money. Instead, they just want you to fill out an online form that gives them your personal information (such as your bank account number). With this data in hand, they steal your identity and your accounts.

A new variant uses “air drops” as bait. Digital asset platforms sometimes reward investors with freebies called airdrops, which are free tokens or coins sent directly to investor wallets. Scammers not affiliated with the platform can also deposit free tokens into users’ wallets, but they are a Trojan horse, not a giveaway. If you interact with the tokens, you could give hackers access to your wallet, allowing them to empty your holdings.

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