Crypto Academy Season 3 Week 6 - Homework Post for Professor @yohan2on on Crypto Scams

CryptoCurrency Scam

We now live in a world of lies and deceit, which the cryptocurrency world is not an exception to, which has been over a decade. The Cryptocurrency scam has been the order of the day in the world of cryptocurrency. Many people have fallen victims to this scam and have lost their life savings through cryptocurrency scams, which, in one way or another, are preventing others from investing in the world of cryptocurrency. Currently, there are numerous cryptocurrencies in circulation, approximately 10000. It is very hard to determine which of them is real or not. Some were developed for the purpose of defrauding the public domain, but mind you, there are some with good intentions and with real projects, which means they are genuine.
Simply put, cryptocurrency scams can be defined as fraudulent acts in the cryptocurrency world to steal or rob cryptocurrency holders of a particular asset, thereby leaving them broke or with nothing.
In an instance of these scams, if care is not taken, the victim might take his or her own life because the psychological emotions the person will go through would be unbearable. I personally had an experience of that and I know how it feels to be in that state. When I got introduced to the crypto world, I was very curious and decided to explore more. Low and behold, I got introduced to a crypto Ponzi scheme where I invested $100 as a starter package.
At the end of every two weeks, my investment earnings would accrue until you reach about 50% of the investment before you can withdraw or plough back for a higher package. I got to 50% and I was restricted from withdrawing due to their system failure. This continued to happen for a week and eventually ghosted out. I was left devasted and disappointed and did not know where to start from. Crypto scams are real and I never wish any family members or friends to fall victim to them.

Cryptocurrency scams come in so many ways, and I would like to state some of them below.

• Pump and Dump: Some cryptocurrency owners with no real projects devise this method by creating a cryptocurrency asset, hyping it to the fullest, and when it gets the attention of the public domain, people flock in to invest, it eventually shoots the price of the assets up and they quickly sell them off as they have millions of them and make a profit, then they dump the assets, making the investors go bankrupt and leaving them devastated.

• Phishing: Fraudsters tend to clone the official site of a particular platform, In the login form, they insert a receiver server at the back end. Most of the time, they use Cpanel to do this operation. When they convert the fake urls to tinny urls, they send them to the victims' emails or mediums that they can have access to. When they click on these urls, in an attempts to login, there login details email and password are sent the these fraudsters and they can get access to theses platform and steal your asserts without your notice, transactions messages that are meant to be sent to your emails or sms will be delayed because they can perform another email bombing or your mobile phones sms bombing and you will be able to receive messages of such transactions immediately until they are done with their fraudulent acts before you will be able to It is always adviceable to always check URLs that are sent to you before visiting them.

• Initial Coin Offering (ICOs): Cryptocurrency owners without real projects and without the existence of a cryptocurrency white paper, tend to lure investors by offering a cryptocurrency asset into the market. Investors tend to buy more and the owners ghost out with chunks of profits made.

• Deceits by promoters: Some cryptocurrency owners, with the intention of luring investors, tend to involve celebrities and public figures to back the cryptocurrency and promote it, and in the end, investors are left with nothing.

• Market Manipulation: Some investors can manipulate the prices of cryptocurrency assets to shoot up and, by so doing, they make a profit and as well as ghost out.

Crypto Scam Project (ONE COIN SCAM)

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There is a popular saying that "what men can do, women can do it better." This was proven by a woman called Ruja Ignatova in a negative way. In June 2016, a Queenpin who named herself as the Cryptoqeen, gained the attention of the world and the entire cryptocurrency world at large. This Queenpin wanted to make the world a better place to live in and, for that matter, the cryptocurrency world, promising to overthrow the reign of Bitcoin and thereby giving the opportunity to people/investors who missed the early days of Bitcoin when it skyrocketed 5 years back by introducing one cryptocurrency coin called onecoin in collaboration with onelife network ltd. Millions of people/investors were amazed at the project and saw this opportunity as a golden opportunity to amass wealth and be able to combat the financial freedom we seek to attain. She was able to convince millions of people by her luxurious lifestyle she lived with flashy cars, jewelry, and luxurious mansions all over Bulgaria and Germany. She also brought celebrities on board and organized seminars where these celebrities came and performed. They proved beyond reasonable doubt that onecoin would be a success and would surely be a bitcoin killer. Findings show that the oncoin token had a sale of about €30 million in the first 6 months of its launch.
People began to investigate into onecoins' success. One of their investors was Jen Mc Adam, who invested millions into the project. As the onecoin token was meant to be a cryptocurrency asset, it should have a blockchain, but in actual sense, it did not have a blockchain or be part of any of the two blockchain networks. As part of the investigation, a crypto enthusiast named Timothy Curry did his investigation and got to know that it was a Ponzi Scheme Scam. He once had a skype conversation with Jen Mc Adam and told her that oncoin was a scam and he could prove it. She then gave him the go ahead to prove his claim, which he actually did and connected her to Bjerke, who was a blockchain developer and told her onecoin did not have a block chain
Jen Mc Adam also did her findings for close to 3 months and started asking questions of the founders. They withheld the truth from her and she finally got to know that it was actually a scam.
Then came the time for the cryptoqueen to fulfill her promise of a better future. The opening of the promised exchange got delayed and kept on postponing and investors began to ask so many questions, but it was too late. The event was to take place in Lisbon, Portugal in October 2017 as promoters of onecoin were already on the grounds and the Ruja never showed up as she vanished into the thin air. She went away with over $13 billion dollars and nobody knew her whereabouts.

To what extent have Crypto Scams affected the crypto space?

The adverse effects of crypto scams in the crypto space can not be looked down upon. Instances of this happening create fear and panic among investors and they begin to lose trust in their holdings. An instance of this happening is on our very own steemit platform where the Molly hacks get access to steemians' accounts and transfer their hard earned earnings. They also create fear in the community that most people have the notion that they could be the next inline. Such people are compelled to send all their earnings to their respective exchange wallets to safeguard them.
Another effect of these scams has made it difficult for people to introduce real projects to people who will better their lives in one way or the other. They have declined their invites, saying they are ponzi schemes and will not be part and parcel of such based on their past experiences. The clear example is the steemit community. In prospecting people to join the community, they begin to think that it is a ponzi scheme, and their notion is that any online avenue that will generate an income for you is a ponzi scheme. Because of these happenings, the crypto world will not see new investors and therefore will not see the growth they anticipate to achieve in the rise of the market capitalization of these precious assets.

Will regulations in crypto add value to the crypto space

I strongly believe that regulations in the crypto space will add more value to it. The reason being, all new crypto tokens should be run under the blockchain. Thus, the Ethereum and Bitcoin blockchains. Even though the flows of these two blockchains will drastically be reduced, these scams will not stop in the sense that, day in and day out, as new technologies are being introduced, people study and find the flows of such systems and try to take advantage of them.
More So, people who are involved in these scams should be arrested and brought to book and punished severely, like the likes of the onecoin scam. When that is done, the trust of investors will be gained and more people will troop into the cryptocurrency world and we may be able to achieve the legality of these assets to be used across the globe.

CONCLUSION

To conclude with, i will like to say this lecture has been an eye opener to the scams in the crypto space and will like to encourage new investors who wish to join the cryptocurrency train to always be on the watch out or gain much knowledge before dipping your hands into any cryptocurrency, for it is a percentage of your wealth you are going to invest into and should be valued.

Thank you

Cc:
@yohan2on