Crypto scams are rampant as new aspiring cryptocurrency investors jump onto the bandwagon.
Such scams are usually designed to trick unsuspecting users into giving up their cryptocurrency for nothing in return. The best way to protect yourself is by educating yourself and staying vigilant!
Here are the 5 most common crypto scams that you should be aware of:
1. Phishing Websites
Here’re two websites that I’ve found:
They are very similar and one of them is a phishing website.
If you’re not aware, or you think that the website had just gone through an upgrade or design tweak, you would probably have submitted your details. The hackers or the scammers behind the phishing website would then take your details, log into the real website and withdraw all your money out.
There are many different kinds of phishing websites out there targeting investors who are new to the crypto space or do not really know what they’re doing. Even MetaMask and Phantom wallet have been targeted.
Do be careful when you are accessing crypto related websites or services, because you’ll never know when your wallet is at risk!
Another common way investors land on phishing websites is through Google ads on the search engine. Here’s an example of one targeting Olympus Dao investors and users:
The purple one link is the one I usually click. But notice that an ad with a similar link title is above it in this screenshot.
But if you look at the URL, you would realised that the phishing site has a different spelling – olyrnpusdao.finance which at first glance looks like the original URL.
If you are not vigilant enough, you may click on the phishing website, enter your wallet access details and soon the hackers have direct access your real account and all your funds and cryptocurrencies.
Some phishing sites let you deposit your coins in directly too, you would lose all the coins you deposit there, forever.
How to avoid Phishing Websites?
Always check the website address – double check and triple check before you enter your details.
If it’s your first visit to a project’s website and you are unsure, get the URL or website link from official sources like the project’s Twitter account or Reddit thread. You can also refer to trusted sources like CoinGecko or Coinmarketcap.
Official links provided by these platforms are usually safe.
2. Honeypot Schemes
Honeypot schemes refer to scam or meme coins where users are unable to sell certain coins after clocking massive gains.
Investors who buy such coins tend to be looking for a win fall, they dream of getting rich quick.
But instead, the opposite usually happens.
Here’s an example. You can see the price of this coin shoot up quickly and in a single day, crashed to zero:
This massive red bar was where the developers of the coin simply sold everything in their hands, causing the price to crash.
The aftermath? Investors are left holding a bag of worthless coins.
How to avoid Honeypot Schemes?
Simply avoid investing in coins that are not listed on CoinGecko or CoinMarketCap.
As most of the honeypot schemes are usually meme tokens or tokens that were just launched like one or two days ago.
Investors are trying to ride on an early wave and hopefully reap profits as it grows. But these projects may not have much background for you to research into.
It’s better to be defensive and not chase after potential massive profits if you are unsure about a project’s legitimacy.
3. Rug Pulls
Rug pulls are some of the hardest scams to detect because you never know what the developer team will do with the funds that you’re invested with them.
They may promise a strong future roadmap or a great product. But if at the end of the day, they sell out all their coins, investors are left holding worthless coins.
One example is AnubisDAO which is a fork (aka copycat) of OlympusDAO.
An investor, Brian Nguyen who had the mentality of “buy first do research later” end up losing $470,000.
There are plenty of rug pulls out there, another particularly memorable one is the the SQUID coin which rode on the popularity of the korean drama, Squid Game. Investors in the SQUID coin were scammed a total of $3 million. Ouch.
How to avoid Rug Pulls?
Always do your own due diligence and checks before investing your money into any crypto projects.
Another way to prevent from getting rug pulled is to only buy coins that are listed on reputable, centralized crypto exchanges like Gemini, FTX or Tokenize.
This is because such coins have gone through stringent checks by the centralized exchange to make sure that these coins are legit. They are unlikely to be rug pulled.
4. Clipboard Hackers
So you think that you have been very vigilant and that your process is very safe.
But, because your wallet address is so long and random, you cannot remember it. So, you save your wallet address on your computer and copy it whenever you want to send coins to it.
But!
If your computer is infected by malware, and you were unaware. A hacker intercepts the process when you copy and paste your wallet address in without checking and replaces your wallet address with theirs.
You end up losing the coins that you send.
These are called clipboard hackers. They are usually in the form of a malware or software that you download (whether intentionally or accidentally) when you visit websites.
How to avoid Clipboard Hackers?
Avoid visiting untrustworthy sites or installing any random software or pirated software. You never know that you may be installing a malware or a Trojan horse.
Through these softwares, hackers could tracking your keyboard strokes, intercept addresses and may even be able access your accounts as well.
5. Discord / Telegram Scams
These are perhaps the most common crypto scams, if you have been in crypto for a while, you probably have encountered some form of discord or telegram scams.
In our community of crypto investors, many have shared how they have lost their crypto via this.
The scammers would usually send you a direct message (DM) or private message (PM) on Discord, Telegram and even twitter. They would either be in the form of an ‘early’ announcement, alpha or even links to a phishing website that looks like a project you’re following.
Once you follow their links or advise and deposit your crypto with them, the scammers will make off with your coins.
How to avoid Discord / Telegram Scams?
Always check the official accounts for links and updates.
Be wary if strangers are messaging and sharing ‘alpha’ or ‘secret money-making secrets’. 99% of time, it’s going to be a scam.
There is no free lunch in this world.
Stay vigilant!
That’s the 5 most common crypto scams, but do note that there are many, many more scams out there. The scammers are creative and won’t stop at just these tactics.
So when you invest in the cryptocurrency, do take note and find out what you are investing into.
If you found this interesting and want more, I share the fundamentals you need to know to start investing in cryptocurrencies safely. Join me at the next live session and ask me anything.
p.s. if you prefer to learn via video, watch this:
