Many have hit big bucks by investing in the ever-growing crypto market with all its ups and downs. On the other hand, many have also lost tons of money – though this class includes those who hit big. Now, many things are responsible for these losses: market crashes, poor trading decisions, investing in projects without potential, you name it. But one, in particular, has been the bane of crypto investors worldwide: scams. Let’s observe the newest crypto scams you will do well to avoid.
Enter Crypto Scams
Imagine aspiring to enter the crypto industry and profit from its opportunities. You raise the needed funds, and after observing the market and its trends for a while, you find some area to invest in – only to lose it all.
The reason? You have been taken in by a crypto scam. This is the bitter experience of many investors in the crypto market today.
Between October 2020 and May 2021, at least 7000 crypto investors reported losses to crypto scams totalling $80 million. In perspective, that was an increase of 12 times the number for the same period running back to the previous year.
Clearly, this menace is growing, and it gets worse: crypto scammers are continuously upping their ante.
But you should not worry, because there is good news. Indeed, this post will arm you with the information you need to protect yourself against even the newest crypto scams. Ready? Let’s explore.
The Newest Crypto Scams in the Market
What are these elaborate scams that investors face in the market?
Many of the newest crypto scams tend to capitalize not only on an Investor’s desire for king-size returns but also on their lack of expertise with tech.
Now, we know that some of the biggest names in the crypto industry rose by investing in new and unknown cryptocurrencies. Following their example, many investors now seek out new projects to invest in. Unfortunately, scammers have not missed this trend.
Some have begun to capitalize on this by creating their own crypto, but with the code altered for mischief.
In some cases, they may program the token to be useless. Other times, they may impede essential trading functions.
We will be looking at such schemes here.
● Hidden Fees in New Crypto Projects
In a way, the success of smart contracts in Ethereum and the revolutionary ideas of other platforms has caused the idea to boom in the industry.
After all, reading and writing smart contracts calls for some understanding of computer code – which many investors lack. Many scammers now capitalize on this ignorance.
They create and sell their own crypto tokens with a shady clause in the smart contracts. These clauses stipulate that any resale of the tokens will remit large percentages of their value as fees.
A case in point for this is MetaMoonMars, a reasonably recent cryptocurrency that charged a 99% fee per resale. Projects like this rob you of all your monetary investment at the buy phase.
● NFTs With Malicious Code
The NFT market has apparently not been exempt from the fraudulence in the crypto market, as many investors have found. Buying NFTs can be hazardous, especially with how it exposes you to scams.
So, to buy NFTs, buyers usually have to transfer some of their crypto tokens from secure wallets to platforms like OpenSea. Now, these platforms for NFTs are much less safe, and hackers have learned to exploit that.
For example, early this year, researchers from Check Point looked into a scam that happened on OpenSea. Then, the platform was performing an upgrade, which it announced on social media.
Later, as the investigation revealed, hackers decided to exploit this by sending scam emails after the OpenSea format to unsuspecting users.
Of course, the emails contained links that, upon opening, required users to sign a transaction that looked very OpenSea. Of course, when they signed, all their NFT holdings were flushed clean.
When Check Point reported this issue to OpenSea, they rectified the problem and updated their security warnings to customers. However, reports of similar mishaps began to stream out of other platforms like Vanunu. Sadly, these scams never end, and scammers always move tents.
● Buy and Sell It Not
This is another kind of scam function that researchers have identified. Here, scam artists write a clause into the smart contract of a token that essentially prevents any other buyer from selling at all.
Of course, the result is that the scammer now has near-absolute control over the price of the token – with the assurance that buyers can’t cause the price to drop by selling
Then, the next step in the process is that they begin to buy it in large quantities at climbing prices. As the buying continues, the token eventually gets listed as a high-seller on popular crypto platforms. When this happens, people become interested in the coin and start buying.
Unfortunately, they soon find they can’t sell, which means they can’t make a profit. When the scammers have made as much as they like from people buying the token, they simply bail out.
How to Avoid The Newest Crypto Scams
Here are some things you can do to avoid falling for scam function antics.
- To avoid falling for high-fee and sell-it-not scams, you should first buy small quantities of the token. Then try to sell it. If you find you can’t sell, then it’s obviously a sell-it-not token. If you can, but the fees are unreasonably high, you know you have a high-fee scam on your hands. Usually, that’s your cue to walk away.
- Try to stay off overly new or unknown crypto projects.
- To avoid NFT scams, you may want to try forgetting about NFTs. Alternatively, you should practice constant vigilance and be careful what you click. Also, always make sure to use the most secure platforms.
- Investigate any coin into which you’re about to invest. Platforms like 4Bulls can help you a great deal here. Its price prediction interface has a function that will allow you to check the confidence score of any coin. Of course, that will help you determine how safe it is to invest in that coin.
This class of newest crypto scams exploits the desire of investors to earn easy crypto or multiply their current crypto holdings.
● Secret Strategy/Investment Scams
In the online space, there are many forums where enthusiasts can discuss all things crypto. Of course, such platforms are great for keeping up with some trends and even learning a thing or two about crypto.
However, like the snake in paradise, scammers are always lurking around and fishing for potential victims.
When they identify you as a potential quarry, they will get to work immediately on your dm (direct message box), or they may send emails. These messages usually contain advice or “once-in-a-lifetime” offers, strategies, or investments that should make you money by the boatload.
Then, they may supposedly request amounts of cash or crypto to put into that strategy or investment. If you oblige, you will eventually find it was all smoke and mirrors.
● False Websites, Apps, and Wallets
This type of scam is so easy to fall for. Essentially, the hackers create crypto wallets where you can store your crypto. Of course, most people know to keep their crypto only in well-vetted wallets. However, this is where scammers apply a bit of psychological manipulation. That way, they can lure in unsuspecting crypto holders with tempting offers like free crypto.
Aside wallets, they may create websites or trading apps into which they may lure users with similar offers. Ultimately, something unpleasant comes of it for investors. They will usually lose any crypto they place in wallets or trade on websites or apps.
● Airdrop Scams
This is technically one of the oldest antics in the book, but scammers have continued to refine it. One of the most popular methods for this scam is the “Connect your wallet” airdrop phish. To be sure, linking your wallet to a site is common practice in the crypto space. However, not all sites are legit.
Most times, airdrop scam sites will ask you to connect your wallet to receive some free crypto. When you do this, any further permissions you grant may lead to funds disappearing from your wallet. In the worst cases, they may wipe your wallet clean.
How to Avoid EazyCrypto Scams
The following can help you avoid these scams
- Be careful with “secret crypto strategies” that promise you surreal gains. A good rule of thumb is that if it’s too good to be true, it probably isn’t true.
- Never use or transfer your holdings to any websites or platforms that are not well-attested. Stick to the most trusted ones.
- Avoid airdrops like the plague.
Market Manipulation Scams
Among the newest crypto scams, this particular class is particularly notorious. They usually involve some investors attempting to influence the market to make their own profits. This problem is rampant because crypto markets are still relatively new and much less regulated than other markets.
● Pump-and-dump Scams
This involves the efforts of an individual or group of them attempting to make the price of an underperforming crypto asset rise. This is the first step – the pump. Usually, they achieve this by spreading sunny misinformation about the asset through every means at their disposal. Then, they may affirm strongly that a surge is coming.
Ideally, they will urge other investors to buy and hold to secure their scheme. As investors get more and more motivated to buy, the price rises till it reaches a point the schemers consider suitable.
Then, they begin to cash out, making massive profits in the process. Of course, investors soon realize the whole thing was hot air, and they begin to cut their losses, causing the price to fall.
Spoofing is a form of market manipulation where investors place multiple buy or sell orders to create the illusion of market momentum. They then cancel these orders before the broker fills them.
In many cases, some scammers may use bots or dummy accounts to place large trading orders. This gives other investors illusions about demand trends, and the scammers may then react accordingly and make massive profits.
Churning is quite similar, but it involves a broker in a client’s account executing excessive trading to generate more commission. In addition to unnecessary fees, affected investors may face needless tax liabilities.
How to Avoid Market Manipulation Scams
If you must avoid these scams, then you should:
- Trade on more prominent and reputable exchanges with good internal controls and security policies.
- Thoroughly research any crypto assets before you invest in them. Indeed, a legit crypto project will offer a wealth of informational material about its tokens on project’s websites. Please avail yourself of them.
- Be on Guard. Keep a weather eye out for any anonymous accounts or ones with minimal posting history. Be wary of such. This will help you guard against pump-and-dump scams.
Other New Crypto Scams You Should Know
Some other classes of the newest crypto scams are essential for you to know.
● Rug Pulls
This type of scam is something that dogs investors in new crypto projects. Here, the developers of a new project suddenly abandon it and make off with investor funds, essentially pulling the rug from under them.
Interestingly, the tack is usually to get their new token listed on a legit exchange and drum up investor interest. Unfortunately,once the developers realize enough investor funds through the project, they abandon the ship and ride off into the sunset with their takings.
In fact, this sort of scheme happened in late October 2021. At the time, it was an epic combination of the buy-it-not and the rug-pull. Back then, a new crypto called Squid coin (piggy-backing off of the Korean drama Squid Game) was making waves as the next big thing on PanCakeSwap.
This coin was programmed such that, as Investors soon found, one couldn’t sell it after buying. Buyers noticed this but kept buying.
By November 1, Squid coin had increased well over 200,000%. That was when the developers pulled the rug, running off with $3.36 million and leaving investors stunned.
● When Good Companies Go Bad
This is probably the most unfortunate of all the scams thus far. Typically, we look out for legit crypto companies to invest in. After all, they’re the companies we can count on. But what happens when these companies go dark? What happens when a perfectly legit company dabbles in illegal dealings or scams investors?
Such an event happened recently with the company Celsius. This company entered the crypto market after realizing that HODL investments were basically sitting in wallets and doing nothing. The company then came up with the idea of having people use their crypto as collateral to obtain fiat currency which they could invest elsewhere.
Later, the investors could pay back the loan with little interest and collect their crypto.
However, the company began to face financial problems as its investments were not yielding sufficient returns. This is where things went grey. Recent assessments of the company’s finances show that it is making up for its deficit on old investor crypto collaterals by using those from new investors. This is the definition of a Ponzi scheme.
What Do You Do to Avoid Scams of this Nature?
Well, to do that, you must:
- Pay attention to any websites and third parties involved in any projects. Do not rely on hearsay.
- Stick to more centralized crypto exchanges. They tend to have stricter regulations and oversight. They’re your best chance to avoid illegitimate projects.
- Keep up with the finances of any company you’re dealing with. Also, analyze their public financial statements or find an expert to do it for you. You may be able to identify something untoward that should be your cue to walk away.
As we have seen, crypto scams are to the crypto market what a shadow is to a man. Where there is business, there will be scams, and perpetrators of these are creative. They constantly develop innovative new crypto scams to fleece investors of their precious funds. It is imperative, then, for every investor to know what these hooligans are up to at any given time and how to avoid falling prey.
Hopefully, this post has armed you with a comprehensive understanding of some of their most recent schemes. So now you know what to watch out for as you engage with the market.