Crypto scammers are always looking for new ways to steal users’ crypto. The massive growth of this exciting industry in recent years has created plenty of opportunities for cryptocurrency scams. According to a report by Chainalysis, cryptocurrency crime had a record-breaking year last year, with fraudsters stealing about $15 billion of crypto. Unfortunately, as scammers become more sophisticated, we should also expect many cases of cryptocurrency theft in 2022.
If you want to start trading crypto, it’s essential to be aware of the risks. Read this new PointPay article to learn more about crypto scams and how to spot and avoid them in summer 2022.
How to spot a crypto scam
So how to spot a cryptocurrency scam? It is easier than it may seem at first sight. Some of the red flags and warning signs are the following:
Promises of high returns
Be wary of investment schemes that guarantee very high returns. The thing is that no financial investment can guarantee future returns. Investments can go down and up, which applies to crypto investments. If someone promises that you will definitely make big money, it is much likely a crypto scam. We understand that the greed to make easy money can be intense. However, if you want to trade crypto, you must be patient and careful with flashy crypto schemes and promises of impossible returns.
A poor or no white paper
Every trustworthy crypto project should have a white paper. PointPay experts always say that is one of the most critical aspects of ICOs (Initial Coin offerings) and IDOs (Initial DEX Offerings). A white paper in crypto is a technical document that explains how the cryptocurrency has been designed and how it plans to work in the future. So if the white paper doesn’t make sense or you can’t find it on the project’s website, give such a crypto a miss and find a better investment opportunity.
Check that blockchain
Cryptocurrencies operate on blockchain networks. No, there is no need to know exactly how a blockchain works. However, remember that a crypto token simply can’t exist without one.
Crypto scammers like claiming their blockchain is “in development,” “about to be released,” or just keeping silent about that. The OneCoin crypto scam is a good example of that. The scam project’s founders claimed they kept their blockchain on their own PCs.
Crypto buzzwords and hot tips from ‘experts’
Fraudsters like to use the so-called crypto language to persuade novice traders to bring their crypto-curious friends and colleagues into schemes and pyramids. As an example, they can promise different bonuses for finding more members. Don’t forget that crypto-related and blockchain projects don’t have members. The crypto community includes traders and investors instead.
Furthermore, don’t get any crypto or investment tips from analysts, media personalities, and even experts. First of all, some of them can be fraudsters and crypto scammers. Secondly, they also may be wrong about a particular investment opportunity. Cryptocurrencies are highly volatile assets, and the crypto market is incredibly unpredictable. It is much better to visit price-tracking websites like CoinMarketCap and CoinGecko and find everything you need about promising small and mid-cap cryptos.
Anonymous or unknown team members
Despite the fact that the first and leading cryptocurrency was created by an anonymous figure under the pseudonym Satoshi Nakamoto, everything related to crypto should bring more transparency nowadays. With most crypto and blockchain companies, it should be possible to find out who the developers and founders behind them are. It means easy-to-find biographies and an active presence on social media. If you can’t find anything about who is running a project, don’t invest in it.
Protecting yourself from crypto scams in summer 2022
Here are some useful tips and steps every trader should take not to fall victim to a crypto scam.
- Protect your wallet. If someone from the customer support of your wallet asks you to share your password or private keys, it is definitely a cryptocurrency scam. Keep your wallet keys private, and never keep the recovery phrase online — it is better to write it down on a piece of paper and leave it with other important documents. Furthermore, keep an eye on your wallet application.
- Never send crypto to unknown external addresses. Reputable trading platforms like PointPay will never ask you to send cryptocurrency to external addresses to verify your account. If you received a message with such a request supposedly from a representative of the wallet you use or exchange, it is definitely a crypto scam.
- Be patient and take your time. Fraudsters often use high-pressure tactics to get novice traders to invest money quickly. They can promise different time-limited bonuses or discounts. Before participating in such a deal, do your own thorough research — check the official website of the project as well as social media. If a project is trustworthy and a deal is not a crypto scam, there should be official announcements on Twitter or Telegram.
- Download apps only from official platforms. Even though fake and scam apps can end up in the Google Play or App Store, it is safer to download them from these platforms than elsewhere. But first, check the official website to ensure the project has the application.
- Invest only in something you understand. If something seems not clear to you, it is better not to transfer your money. Don’t make rash decisions — take more time for thorough research, and talk to experts and community members.
- Be careful with social media ads. Crypto scammers often use social media to promote their fraudulent schemes. And this is logical because posting something on Twitter does not take much time or effort. Fraudsters might also use unauthorized images of famous business people and media personalities to create a sense of legitimacy. It’s always best to maintain a healthy skepticism and do due diligence.
Final thoughts
Even though we only covered some information on spotting cryptocurrency scams and how to stay safe, you may already feel more secure trading cryptocurrencies. As with all scams, protecting yourself comes down to keeping your data secure and eyes open.
We at PointPay take our users’ account safety and protection very seriously. That’s why we always share tips and the latest information on how not to fall victim to cryptocurrency scams. We also want to remind you that you should always report suspicious and fraudulent activity to our customer support.
Stay safe and start trading crypto on PointPay!
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