Crypto Academy / Season 3 / Week 6 - Homework Post for @yohan2on

INTRODUCTION

Scamming is something I believe that won't stop on this planet regardless of how special strategies the government might apply to fights it. Though the government can minimize its rate but can end it because the world can never go back instead it keeps on moving forward because of new innovations and developments here in the world.

Crypto scams

One thing about development is that it brings massive change to the entire world. As such, lead to attention for good and bad. Basically, crypto assets are really trending all over the world, and many people want to join because there's cool money one can benefit from it, and it is permissionless, and also has turned people into millionaires and billionaires.

With this effect, some people who would like to invest as such might not know the one that's a scam because they want to make money. Moreover, crypto space is permissionless as such full of risk not just the volatile nature of crypto assets but also the scammers or thieves function every 24/7 looking for who to scam or dupe their assets.

It is very obvious that in nature, scammers or thieves focus on trending things and anything that produces profitable results. So don't be surprised to see dubious individuals existing in the crypto sphere since the crypto asset is the trending investment.

These dubious set of people called scammers have a special stratagem they use to maneuver their way into the crypto trader's or investor's account for the purpose of swindling traders' or investors' funds or assets, and due to the anonymous nature of crypto, it is untraceable. This term is basically referred to as a Crypto scam.

Let's check out the possible ways crypto scam happens in the crypto ecosystem.

CipherTrace’s 2020 Cryptocurrency Crime and Anti-Money Laundering Report reveals that in 2020, major crypto thefts, hacks, and frauds totaled $1.9 billion—the second-highest annual value in crypto crimes yet SRC

FAKE WEBSITES AND LINKS

One unique about these scammers is that they don't rest and they have different stratagem which one of them is by creating fake websites or links. They create this fake website in such a way that it will have the same nature with that of the original one just to dupe people.

^{SCREENSHOT FROM BINANCE MESSAGE WARNING AGAINST PHISHING}

However, they will change the original website and add a fake URL on the original website either by swapping one or two words on it. And once a victim falls into the trap, without notice and put in their private keys on the fake website Exchange. Instantly, the scammers will transfer all the crypto funds on the wallet to theirs in a twinkle of eyes make the victim lose all their crypto assets or funds.

SOCIAL MEDIA SCAMS

Social media scams are another rampant means scammers use in scamming people.
Most at times, they use a well attractive name like ASTRO INVESTMENT with a description of this nature Under the surveillance of (SSA), (FBI),(FDIC) (SIPC) You're secured 100%. They will be providing information about crypto assets and would ask you to invest with them and once the victim invests, they will run or change another account.

^{Screenshot from TELEGRAM SHOWING A SOCIAL MEDIA TACTICS OF BEEN SCAMMED}

Just as I said these scammers don't rest until they achieve their goals. In most times, they might hack a notable crypto investor's account which people receive information about the nature of crypto. As such use the account to manipulate people's funds by circulating fake news as such duping crypto funds from the people.

Crypto Ponzi schemes

The scammers use Ponzi schemes to dupe crypto investors by initiating scheme for investment and it will look so real to an extent that they will respond very well for the first time in order to get the focus of the victim.

This investment will be like invest your crypto assets and receive a certain percentage of interest from your investment. When the victim might have received the first returns, the victim would like to participate again with a huge amount of crypto assets to obtained more interest. In most cases, the victim might bring more people since there is proof.

We all know results, prove and evidence eliminate doubts, so more people would like to anticipate the investment as such providing more liquidity or cash to the scammers. Now, the scammers will take all the crypto funds from the victims and runs away.

For instance,
The Bitcoin Ponzi Scheme Operator called Trendon Shavers pleaded guilty to running a $150 million Ponzi scheme to Securities Fraud. With this effect, Trendon Shavers faced roughly 20years in prison for anticipating into defrauding investors with an estimated value of $4.5m while operating Bitcoin Savings & Trust (BS&T).

^{IMAGE SHOWING BITCOIN PONZI SCHEME}

SRC

This investment was operated in a way that 7% of interest to each of the investors who a willing to invest in the bitcoin market arbitrage activity in 2011 and 2012. SRC

FAKE CRYPTO MOBILE APPS

This is another means scammers scam people by initiating fake crypto exchange mobile Apps without the permission of the original Crypto exchange wallet App. Users fall, victim, when they download this exchange App, and log in their details, with this the scammers will make use of the details to steal all the assets of the victim.

SCAM VIA AIRDROPS

This is another possible way crypto investors can be scammed. It has happened to me but I never complained about the things they required from me. Honestly, the scammers are very creative because they have lots of ways to trapped down people.

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In the case of the airdrop, they will provide information about a coin that will be airdrop and they will make it in a way it will look real by even placing referrals bonus. This is another means to bring more people. So they will ask to place some amount of coins to receive these airdrops most especially sheet coins. So once the victim falls into the trap, and send the coin to them instantly they have seized and the coin.

SCAMMING VIA EMAILS

Just as I said there are many means scamming can take place, so another means is via emails. Scammers initiate fake emails and circulating them to people claiming to be a customer service of exchange platforms demanding for the trader's login details and once the trader falls into these traps, they will transfer all the crypto funds of the victim to theirs. With this effect, all crypto Exchange platforms normally send messages to their users that none of their customer services would ask for your details.

Examples of ICO and Ponzi scheme

Pincoin: a $660M ICO Scam That Deceived 32,000: Pincoin is the latest in a series of high profile ‘exit’ scams. Their ICO has made off with more than $660 million of investor’s hard-earned money. With over 32,000 people conned, the Pincoin scam is one of the most successful in recent times.SRC

^{IMAGE SHOWING TYPICAL EXAMPLE OF ICO AND PONZI SCHEME}

SRC

The image above is a typical example of the Ponzi scheme. The image above is the Pincoin scam which was initiated into the crypto sphere in January 2018, precisely on the 12th by an anonymous Vietnamese team.
From the look of the roadmap of this scheme, it is very enticing that investors must invest. Not only the high profit the investor will receive but the roadmap the team showed.

Pincoin has been launched, and about 48% ICO monthly reward each of the investors will receive. Though is based on the number of assets deposited by these investors that will determine the interest. Moreover, It was reported that about $660, 000, 000 was invested in the Pincoin project by over 32,000 people. Let's check out the image for better clarification.

^{IMAGE SHOWING THE PERCENTAGE INTEREST}

SRC

However, it was after the first payment of the investors, that the true motive of this team started manifesting, as they initiated another coin known as iFan. They used the iFan to pay their users, and one funny aspect of this coin is that no crypto Exchange platforms that have any pair of the coin to exchange it. It was later the investor knew about the coin and it was too late for them to realize that they were scammed.

This is another crypto scam example:
This is a crypto scam that involves Thomas Jiříkovský a Czech Republican, whose assets were seized as a result of been suspected of laundering $40 million in stolen Bitcoins from a market called darknet.

^{IMAGE SHOWING THE LAUNDERING $40 MILLION STOLEN IN BITCOINS FROM DARKNET MARKET.}

Src

After this incident, there was an order to shut down the market from operation for some months as a result of a so-called vendor who stole $6 million worth of bitcoins.

According to investigators Jiřikovský and Eve used Bitstamp to convert his bitcoins into crowns. SRC

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TO WHAT EXTENT HAVE CRYPTO SCAMS AFFECTED THE CRYPTO SPACE?

Basically, Crypto scams have really affected the crypto ecosystem which has made most investors lose all their assets as such has put fears in the heart of the newbies

FEAR INVESTING IN CRYPTOCURRENCIES

Due to these crypto scams, many newbies in the crypto sphere are afraid to invest in cryptocurrency because they are afraid of being scammed.

BAD REPUTATION TO THE CRYPTO WORLD

Due to these scams in the crypto sphere, most people find it very difficult to invest in crypto assets because as a result of a lack of trust regardless of the decentralized nature of crypto blockchains. With this effect, the crypto scams have reduced the reputation of the crypto ecosystem as such have put fears on most people's hearts not to have an atom of interest in crypto.

Just like my friend who got scammed during the fake Tron and Shibu Airdrop when the scammers asked him to send about 2000 Tron and 150 Shibu respectively which he did to get about one million of both coins. Since then he's been afraid to invest in any coins, and the worst of it is that he doesn't even have any interest again due to his previous scam experience.

CREATES A WRONG Mindset towards Crypto NEWBIES

Due to the numerous crypto scam news, the newbies and those that have the desire to join into the crypto space have heard both the internet or from friends, which has really poisoned their mindset on crypto toward investing in crypto assets. To them, everything about crypto is just fake.

IT LEADS TO RESTRICTIONS AND BANS IN MOST OF THE COUNTRY

This is the annoying part of these crypto scams as it has brought restrictions and ban in most nations like my country Nigeria.
As of last year, I normally invest in crypto assets and when I need cash I sell to some exchange platforms and get my cash.

Due to these crypto scams, the government placed a ban on cryptocurrencies as such, hide my crypto exchange Apps like Binance and Huobi because I don't want to be intimidated by the law enforcement agencies. Though it is not just my country alone, also some other nations are observing the same restrictions and bans.

However, as of earlier February 2021, precisely 5th, the Central Bank of Nigeria sent a message to all banks and other financial institutions in the nation, not to accept any exchange from any crypto Exchange platforms. So it became prohibited since February to date, and now we are making use of local Peer-2-Peer (P2P).

Will regulations in Crypto add value to the Crypto space?

Generally, regulations can affect the crypto space value in two ways. Positively and negatively.

Let's check out the positive aspect.

POSITIVE REGULATIONS

One special part of regulations is that it brings orderliness, make work to be efficient and effective, and lastly secured. Hence, if crypto space is been regulated by agencies or any entity, it will create a safe place where investors will invest more consistently without fear as such will increase the volume of cryptocurrencies.

If crypto space is regulated, the market manipulation. Another is that it will reduce the rate of crypto fraud since it promotes a safe environment to invest in cryptocurrencies.

NEGATIVE REGULATIONS

Of course positive regulation promotes a good and safe environment to invest in cryptocurrencies, but on the other hand, it will cause some issues like eliminating the decentralized nature of cryptocurrencies, increase transaction fees with no difference with the fiat currency.

Moreover, the regulatory bodies will impose a tax on all crypto investors since the regulatory bodies will be paid for their work.
So with all these, it will really affect the beauty of anonymity because the regulatory bodies will like to monitor all transactions made by the crypto investors.

CONCLUSION

Crypto scam is a big concern to the crypto sphere as it has caused lots of negative issues like ban and restrictions in some nation as such making crypto market less effective in those part of the nation like in Nigeria.

However, it's recommended to be very extremely careful because crypto scams can't be totally eliminated. Well to fight for crypto scams let's say No to crypto scams.

THANKS FOR READING THROUGH

Cc:
@yohan2on