Cryptocurrency Frauds To Watch Out For
Cryptocurrency hype is for real and here to stay. Both institutional investors and corporates are
betting big on cryptocurrencies. Despite the attention that cryptocurrencies are generating, many
detractors believe it to be nothing more than a bubble. Their concerns stem from the various
scams that have rattled the market during the past few years. These scams not just cost millions
of dollars to investors but also exposed the chinks in the armor of cryptocurrency exchanges and
blockchain startups. While there is no denying that now is the best time to jump on the
cryptocurrency bandwagon, you must not let your enthusiasm shroud your judgement when
investing in cryptocurrencies. To ensure your name does not appear in the list of cryptocurrency
fraud victims, keep an eye out for some common scams we have listed in this post.
While it may be tempting to deposit your coins with an exchange that claims to have an
unrealistic fee, you must always remember that if it seems too good to be true it probably is.
Watch out for exchanges that spring up overnight without any prior announcement.
Cases of exchanges disappearing with investor money overnight without any trace aren’t unheard
of. Before trusting a cryptocurrency exchange with your hard-earned money, make sure it has
security mechanisms in place. Avoid storing your coins on the exchange. If you don’t have a
cryptocurrency hardware wallet, shift your coins to an offline wallet every day after you decide
to call it a day.
Holding Initial Coin Offerings has become a common practice among blockchain businesses to
raise funds. Many ICOs are however anything but an earnest attempt to raise money to fund
future projects. Scamsters behind fraudulent ICOs lure investors by promising them unrealistic
returns and once unsuspecting investors take the bait, these tricksters disappear with the money.
To avoid becoming a soft target, only trade with reputable companies. If you come across a
promising new company, dig up important info related to the minds behind the project. Stay
away from companies that try to rush you into a decision.
Ponzi schemes are the easiest to spot, yet many investors fall for them. Never invest in a scheme
that encourages you to get more investors on board, promising you to offer a share in the profits.
Watch out for schemes that promise unrealistically high returns. Scam artists are everywhere
including social media platforms, which is why you might want to think twice before acting upon
any advice that you get from an unverified source on LinkedIn or any other social media website.
Gustavo Fonseca loves anything digital and crypto-related which makes him sit up and pay attention. He got into the world of digital marketing and business digital transformation career in 2010. Some time later he got into Crypto, a dynamically developing segment at the intersection of the financial services and technology. Gustavo joined TheDailyCoins in September 2018.