What are Crypto scams?
Crypto scams has increased a lot the past few years. As cryptocurrencies continue to increase in price and gain value, the rate of scams continues to rise as well. Recently in the DeFi space, we have seen a lot of scam DeFi projects launched on the binance smart chain rugpull on their investors. When we talk of crypto scams, it simply means any fraudulent actions by scammers to steal the funds of crypto users and investors. In the cryptocurrency world, crypto scams come in variety of forms namely;
Scam crypto wallets on playstore or app store
There are a lot of scam crypto wallets on playstore or app store. Scammers are either creating the fake replica of genuine wallets or creating fake crypto wallets to steal the funds of crypto users. When crypto users send funds to these scam crypto wallets, they funds eventually get stolen as the scammers have access to the wallets.
Comment section scams
Social media platforms like Youtube, Twitter have become very popular in the cryptocurrency world and has been very valuable for projects to connect to their communities and also for individuals to interact and socialize with other members of the crypto community. However, these social media platforms is serving as a medium for crypto scammers to scam crypto users. Scammers create scam comments on twitter, youtube to try to lure crypto users so as to steal their funds.
Scam cryptocurrency projects
Ever since ICO became very popular, there has also be an increase in scam cryptocurrency projects who hold ICOs and run away with investors’ funds. In the DeFi world, most especially on BSC, there have been a spike in crypto scams, as a lot of scam projects are launching on BSC with clear intentions of rug pulling or using other exit scam tricks.
Scams on P2P
P2P is without a doubt one of the amazing sides of cryptocurrency. Not too long, it was very difficult to sell crypto for local fiat currency. This can be done physically or only through exchanges who sell to the crypto users, It was not easy to trade directly with other real crypto users in a peer-to-peer way, until exchanges began to introduce P2P section on exchanges to allow crypto users trade their cryptocurrency directly to fiat with other crypto users in a peer-to-peer way. This has also become the target for scammers as they try to scam crypto users who fall victim.
Scams via youtube adverts
This is another medium scammers are using to steal funds from crypto users. They strategically buy ads from youtube and use certain keywords that put the ads on crypto related videos. These ads have the real video of big names like the founder of ethereum or other cryptocurrency founders and a scam wallet address asking users to send funds to. This scam became popular recently and scammers take advantage of new crypto users, inexperienced crypto users or greedy crypto users.
Centra
Crypto scams have become common as different scam projects keep popping up left right and center. One of the reports that came out some time ago was the Centra scam that parted ways with investors’ funds. According to a report by fullycrypto, It was said that Centra surfaced as a promising project in July 2017 promising. The project held an ICO, targeting $25 million, but because of how promising the idea of the project was as at the time, the ICO was successful and even exceeded the target figure, hitting about $32 million. Reports came out that after the project concluded its super successful ICO, two of the members of the project team left the project. It didn’t take long, some unhappy investors charged the project to court over U.S. securities laws violations, claiming that the project misled investors.
More details can be found in the reference article here: https://fullycrypto.com/centra-co-founder-admits-to-32-million-crypto-fraud
To what extent have Crypto scams affected the Crypto space?
Slowdown in the increase of new investors in the market
This has led to the slow growth rate of new investors in the market due to new investors giving up in the crypto space due to first time bad experiences or new investors being afraid of investing in any crypto project due to news or reports of the continuous rise of crypto scams. Because of this, it has slowed down the growth rate of new investors in the market and as we all know, the more investors in the market buying, the more the growth and increase in price of cryptocurrencies.
Investors neglecting projects with good potentials
This is one of the effect of crypto scams. No one wants to lose money. Investors who like to invest early on projects with promising ideas begin to neglect new projects because of fear of losing their investments. This sometimes becomes a problem because there are a lot of very good and promising projects which gets neglected because investors are afraid of falling for scams.
Some popular countries banning the use of cryptocurrency
Because of the scamming activities done in crypto, some countries have decided to ban the use of cryptocurrencies. The goal of crypto is to increase adoption. However, with some countries banning the use of cryptocurrencies, it hinders the adoption of cryptocurrency.
Reduced the number of HODLERS for new cryptocurrency projects
Because of crypto scams, investors are not motivated to hold their coins especially for new cryptocurrency projects. Investors are more willing to sell their coins when the make some profit because of the uncertainty of whether the project will turn out to be a scam. Some scam projects sometimes wait for months to strategically plan their exit strategy. That is why it can be difficult to tell which project is scam or not even though the project have been in existence for months.
Will regulations in Crypto add value to the Crypto space?
Yes, for me, I think regulations in crypto can add value to the space. Some regulations can negatively affect the crypto space, but when the right regulations are put in place, it can go a long way in making the crypto space even more refreshing for both old and new people in the crypto space.
Increase mass adoption rate
When the right regulations are put in place, it can give people that are not in crypto the assurance and confidence to get involved in crypto. Some persons are not comfortable to come into the crypto space because of their perception. However, with proper regulations in place, more and more people might be willing to get involved in crypto.
Setting standards
Regulations can help set standards most especially for new projects to follow. These standards will help give investors the peace of mind that their investments are in safe hands. At the moment, there are no standards that regulate new crypto projects which is why scammers are hiding behind crypto projects to steal money.
Conclusion
Crypto scams has been one of the major taking points since the early days of bitcoin and cryptocurrency. Scammers are doing everything within their capabilities to steal money from people. In recent times, the rate of crypto scams have increased a great deal because cryptocurrencies are hitting new highs. As coins are hitting new highs, crypto scams becomes more palatable for scammers because their scam efforts will be very profitable. We see a lot of scam attempts on comments, DMs adverts, fake crypto wallets and a host of other scams. With proper regulations in place, it can help reduce the rate of scams in the crypto space.
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This is good content. Well done with your research study on Crypto scams.
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