Crypto Academy Season 3 Week 6 Homework Post for (@yohan2on) Crypto Scams and how to avoid them

Introduction

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Greetings to everyone, I am very glad to be back here on this Academy. After going through what professor @yohan2on lectured about, I was able to make gain knowledge about what crypto scams are and the measures to put in place in order to avoid them. Below is my response to the questions the professor asked.

What are Crypto scams?

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To be able to tell exactly what crypto scams are, we need to know what cryptocurrency is. Cryptocurrency is a digital asset that can be used in buying and selling and also can be accepted in making payments, it also hopes to replace traditional money in the near future.

Knowing what a cryptocurrency is, we can know get into what crypto scams are.
Crypto scams are corrupt, unlawful or illegal undertakings with the intension to rob or mug crypto investors. There scammers do so by tricking the investors to transfer their crypto assets to them directly or indirectly with the aim or making profits or payments. They can also ask you to complete tasks which will end up exposing vital information like your passwords to them leaving you vulnerable.

With all what is said, here are some common cryptocurrency scams that we happen to encounter in our everyday activities.

• Blackmail emails:

This happens almost at all times. Scammers will send you fake emails telling they've got nasty or embarrassing pictures, videos or even personal information about you. Then they will tell you they will be exposing it to the general public and for them not to do so, you will have to pay them with cryptocurrency in order for them to get rid of those embarrassing staffs. When this happens you should know its fake and should be reported right away.

• Social media scams:

It is very common that you will receive messages, tweets, posts or even emails from renowned or popular people on social medias telling to send cryptocurrencies to a particular address for donation or whatever. When this happens, it is obvious that scammers have hacked that verified account and should be reported right away.

• Fake advertisements:

More than 50% of crypto scams occurs as a result of fake adverts being published by imposters. These adverts will either talk about purchasing items at a lower price than normal, telling you you have won an amount of money or any electrical gadget and so you should send some amount of money in order to receive your claim. Also such adverts can talk about investments which are fake and can guarantee you to make huge amount to money within a short period of time. All what I have mentioned above are fake adverts that one has to keep out an eye to.

• Fake apps or websites:

Scammers can sometimes develop apps or websites that will require you to use your personal information or cryptocurrency passwords for other purposes, and when that is done they can have access to your passwords and other information and so can lead to hacking of your crypto account.

Make your research on any Cryptocurrency scam. (Attach a few references to the news surrounding that scam crypto project)

In this section, I will like to talk about one of the most popular and well know known crypto scams that has ever happened in history which is the onecoin cryptocurrency.

Onecoin is or was a new digital crypto currency that was now gaining grounds and was really building an exclusive community of worldwide miners and traders around the world. Not knowing the creator of this particular crypto who happens to be a woman and goes by the name Ruja Ignatova had another plans. After the launch of this coin, she went around telling people to invest into that and promised them a brighter future.

She was able to convince a whole lot of rich investors and they directed all their recourses towards the coin she created with the aim of making profits in future. After a year and a couple of months she was no where to be found. A popular researcher Jamie Bartlett has spent almost a year trying to find out where this scammer is hiding.

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In June 2016, Ruja Ignatova who was a well-known businesswoman came out on stage at the Wembley Arena to announce her project she developed recently, she assured her fans that they were guaranteed to make profits and not even BTC would be able compete with it in the next coming years. According to sources she was well dressed expensively with even diamond earrings on stage that particular day.

What she said at Wembley Arena was really convincing and attracted so many investors. During her speech, she explained to the audience of how Bitcoin came into existence and gave reasons why her coin which is Onecoin will override bitcoin in two years to come or even less. This really got the audience laughing and clapping in joy.
As everyone will like to be a rich person in just two years, people started directing all their incomes that way and in less than 6 months she has already gained enough investors with the aim of becoming rich within two years.

According to BBC, it was stated that in just 6 months more than €30 was invested into Onecoin in the same year 2016. Along the line, foreign countries like Brazil, Pakistan, Canada, China and many many more countries started to know more about Onecoin and decided to direct their resources to it.

Below is the graph showing countries and and their investments in Onecoin. From that, we can see that China has the highest investment rate which has about 400 million euros and Germany almost 50 million euros.

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With all that has been said, we should talk about how she vanished. A lot of experienced investors got to realize that Onecoin was fake and they got to find ways of retrieving their money. But Ruja Ignatova never gave up on trying to convince more investors to direct their money into investing into her project. She was still travelling around countries and still trying to find more investors.

She visited Dubai and other countries like Singapore to spread the idea of Onecoin. As many people was investing, Ruja started buying and spending luxuriously. According to sources, she was able to afford a properties that she couldn't afford to buy years before her development to Onecoin. This got the general public suspicious and kept them on a high alert.

In somewhere 2017, in Lisbon where she had to appear to talk about turning Onecoin into real money, but she didn't appear and was no where to be found without and reasonable reason. This action of her made her investors worried but then it was too late. They tried all means to reach her but there was no avail, and that is when people got to realize they've been taken for a fool.

Up till date she is no where to be found, maybe she was kidnapped and killed but who knows? Investigations are still going on till now, but her co-founder who happens to be Sebastian Greenwood is in jail.
You can find out more here

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To what extent have Crypto scams affected the Crypto space?

Crypto scams that have taken place in the cryptocurrency world has led to so much fear for people who have invested into crypto currency. Even though there so many genuine cryptocurrencies out there but upon seeing all the scams that has happened in the crypto space, its making it hard for investors to be able to trust. These scams have resulted greatly in the poor performance of cryptocurrencies.

Looking at what just happened with regards to Onecoin, it will push away investors form investing into cryptocurrencies and also might result to countries banning of cryptocurrencies. Countries like China has done so and there are other countries that are planning to do so just the matter of time.

Crypto scams has slowed down the rate at which cryptocurrencies grow and so there are still so many people out there who have heard of cryptocurrencies alright but has inflicted fear into them, hence avoiding them from investing. Without these scams, cryptocurrencies would have been well known and generally accepted by anyone out there.

As we all know, scams in the crypto space cannot be stopped entirely since cryptocurrencies digital technology and might fall into the hands of hackers or even scammers so extra care must be taken in order to avoid all these scams we've been seeing and hearing about almost everyday.

Will regulations in Crypto add value to the Crypto space?

To me I will say yes. Regulations in will definitely add lot of value to the crypto world. Regardless of we making everything perfect crypto in the crypto world, and also trying all the possible best to eliminate all the problems associating cryptocurrencies, there will still be a higher risk at with regards to investing into crypto until it is being adopted and regulated by federal governments.

Buffett did make a speech based on this issue some time ago.

"It doesn't make sense. This thing is not regulated. It's not under control. It's not under the supervision [of] any...United States Federal Reserve or any other central bank. I don't believe in this whole thing at all. I think it's going to implode."source

According to Buffett, he does not see cryptocurrency as a thing and that doesn't make any sense to him simply because it is not regulated. To me I am very sure that other countries are not accepting to legalized cryptocurrencies just because it lucks regulations and thus, regulating it will have contributed solely to the growth and acceptance of cryptocurrencies.

Moreover, certain things are happening in the crypto world that wouldn't even have zero chance of happening. Things like companies or individuals using fake accounts to hype a particular cryptocurrency or create fake news about a particular coin wouldn't have been happening if there was strict regulations.

Conclusion

I will conclude by saying crypto scams are very rampant in the crypto space and imposters will do all the can in their power to get what they want from you either money or your passwords to your crypto accounts. Although they cannot be eliminated enitirely but with extra care and regulations by the federal government, it will with minimized greatly.

Thanks for your time