Types of Cryptocurrency Scams

Most people have outrightly labelled cryptocurrencies as scams. This is because of certain scams that have been perpetrated by those who seek to drag the name of the industry to the mud. Cryptocurrencies are not the only investment that has several scam cases. The cause of the growing number of scam cases in the crypto market is because most of the investors failed to gain proper information before investing their money. The fight against these scam cryptocurrencies have begun and the Securities and Exchange Commission will not stop until all have been brought to book. In this article, we will discuss some of the common types of scam that the crypto market is faced with. They include;
Fraudulent or Fake ICO
This is one of the easiest ways to scam investors in the crypto market. All that is needed is just to hype an unexisting product and persuade investors to put in their money. ICO's happen to be the most common scam in the crypto market because it is the means through which developers' can source funds for their projects. The Ethereum network cannot be blamed for these fraudulent ICO's because it is an open source meaning that anyone can quickly create and launch a project on the network.
Several regulatory bodies have stated that why these ICO's are the common crypto scam is because most of these investors want 100% gain on all investments that they make. When a company brings that offer, they are left with no choice than to invest their hard earned money thereby losing it at the end. Some of the major signs of a fake ICO project includes;
• Anonymous team. If more than half of their development team is anonymous.
• No vision or roadmap
• Failing to answer vital questions
• Promising returns that are way too good to be true.
Shady Exchanges
This is another common scam in the crypto market. Most exchanges would spring up overnight and begin trading offering users various amazing features. This is why it is advised to be careful when choosing an exchange. Once your tokens are deposited on these fake exchanges, they might completely shut down or claim that they have been hacked. Already existing exchanges might also run with your tokens if they feel that they are no longer in competition as new and better ones have been developed and launched. Some of these fake or shady exchanges have been listed, and they include; Mycrypto24, Ether-invest, 01crypto etc.
Fake Wallets
Fake wallets is another way investors have lost their funds. These fake wallets often times are Android wallets that investors download from the Google Play Store. Before choosing an Android wallet, extensive research must be done. Most of these wallets give investors control and ownership of their private keys as well as the 12 or 24 random generated word seed. This is one of the ways investors have lost their funds. Most of these fake wallets once they have gained a certain amount of tokens, they immediately shut down.