The Top Five Scams in Crypto (from WalletRecovery.info)
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Fake investment platforms were the most common scam (32%), with Bitcoin the most common asset stolen (66%).
Fake platforms and scammers employ sophisticated techniques like stealing identities of legitimate financial professionals, catfishing romance scams, and elaborate fake trading and gambling platforms.
57% of victims filed a report with law enforcement, but 69% did not get a personal response, and only 8% felt that law enforcement took their case seriously. None got their crypto assets back.
60% of victims blame insufficient education for falling for the scam, 19% blame their poor security practices, and 7% blame a crypto service provider.
Only about 10% of victims thought that crypto institutions were doing a good job of educating customers about scams.
Common signs of scams: unrealistic returns, high-pressure tactics, sales pitches via Telegram, no mention of fees, & lack of reputation.
Fake “scam recovery” services abound and are sophisticated as well, using complex techniques such as sending stolen funds from other victims to collect their “fee” before the bank transfer bounces.
The Top 5 Most Common Scams in Crypto
1: Fake Investment Platform
A fake platform (32% of scams) is a fake trading service that takes your money with the promise of high returns from “trading.” However, it’s impossible to withdraw your “profits.” In 2021, scammers have been concentrating on dating websites, social media, and Telegram groups. Varieties include airdrop schemes, romance scams, pump and dumps, and counterfeit tokens platforms.
2: Phishing and Fake Wallet Validation
Phishing services impersonate a legitimate platform to steal wallet seeds or login credentials. Varieties include wallet “validation” services, “airdrop” scams, coin “forking” services, and dusting attacks. Recent phishing attacks involve stealing identity documents and hijacking phone numbers to gain access to cryptocurrency exchange accounts.
3: Exit Scam/Rug Pull
Exit scam: a project sells a coin in an ICO, but instead of using the funds to build a project, the promoters
take the money and disappear
Rug Pull: a DeFi scam where a coin is released and promoted, then all the value is stolen from the liquidity pool.
4: Scam Coins
Projects that don’t have a legitimate business model and whose promoters simply try to collect as much money as possible without delivering anything of value. By far the most common scam in terms of economic value. Of course, the team behind all coins will claim that their coin is legitimate, but an objective analysis shows no economic value behind these projects.
5: Counterfeit Tokens
A counterfeit token is a DeFi scam in which a worthless token impersonates a real token. Smart contract chains allow anyone to create a token without any restriction on the name, so scammers impersonate real tokens with fake tokens and sell them on both fake and legitimate DeFi platforms. The victim does not discover the fraud until they try to sell their token and realize the knockoff is worthless.
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2021 has been another bull market for cryptocurrencies. Unsurprisingly, billions of dollars flowing into an unregulated market have attracted plenty of scammers too.