The Most Common Scams in the Crypto World


Scams, in general, are any fraudulent business or scheme that takes money or other goods from an unsuspecting person. This applies to any money-making industry.

There are many scam tactics, techniques and procedures, but all these scams have the same endgame - Get Your Keys, Get Your Coin (GYKGYC). Hence, I am calling my blog "Get Your Keys, Get Your Coin". As one of a series of posts, let us start with the types of popular scams that plague the crypto world.

To start, a crypto scam can be categorized into two general types:

  • 1:1 scam: 1:1 is when a scammer targets a user who is innocent enough to fall into his trap. This can be as simple as the disclosure of his/ her private key or transfer of coins.
  • 1:many scam: 1:many is when a scammer defrauds multiple users at the same time, e.g., a rug pull scam. This is more complex and may require preparation and planning, such as setting up a fake cryptocurrency project or even a fake Discord community server.

Below are the popular scams you need to avoid in the crypto world:

Rug Pull Scam
Per Chainalysis report last December 2021, rug pull scams accounted for 37% of all scam revenue in 2021, compared to 1% in 2020. A rug pull scam is when the project team or developers prematurely abandons a crypto project and vanishes with the investor's money. This is also called an Exit Scam. The scammers establishes a crypto project presented as a legitimate and enduring project. But after some time, the project stalls with the scammers disappearing with all user-invested money. Note that this scam is a long con and the scammer-developers may initially invest on marketing/ advertising and infrastructure to establish a legitimate front and bait potential victims.

Fake Investment Scam
Fake investment scams, such as Fake ICO Scams, will lure you to invest in what appears to be a promising crypto project, but is actually a fake project or non-existing. An Initial Coin Offering (ICO) seeks to get funds for a crypto project with a promise of profit. Everything is falsely established to trick you into investing. The scammers can either proceed with a long con (launch the project to get more investments) or just disappear with all the initial funds right then and there. If you do invest, it may be too late to get your money back. Even if you changed your mind and requests for a refund, the scammers will say all sorts of excuse.

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Phishing Scam
The phishing scam is a type of social engineering scam. This scam requires the scammer to reach out to the potential victim through some form of communication. This can be via email, call, message, etc. The intention is to befriend the potential victim, make him/ her feel comfortable and then get the target information or to trick the victim into doing an action that will fulfill the scam. This scam can take the form of spam phishing to target multiple victims. Spams are multiple unsolicited communications, usually from unknown senders.

Impersonation Scam
The impersonation scam is similar to a phishing scam but the potential victim is tricked into believing that the scammer is someone he/ she knows. The scammer has faked or forged his/ her identity into someone who is known to the potential victim. The faked identity can also be someone working for a recognized institution or maybe part of the project/ admin team of the crypto community. This type of scam capitalizes on the existing trust of the potential victim to the person, company, institution or group. In which case, the next step is to exfiltrate information, e.g., login password or private key from the victim.

Baiting Scam
Baiting, by itself, is an essential part of any scam. But unlike phishing, a scammer using this type of scam does not need to reach out to a potential victim. He just needs to lure or bait the potential victim into doing an action, for example, to click a malicious link. These kinds of scams normally lure potential victims with unsuspected winnings or free giveaways of NFTs or airdrops.

Discord Scam
Discord is a popular gaming communication platform that is also popular with the crypto folks. Popular Discord scams include Discord Takeover, Discord Phishing, Free Giveaway Scam, etc. There are a lot of Discord scams, but all these aim to get your credentials (phishing). 

Telegram Scam
Telegram is another communications platform that is popular in the crypto industry. Popular Telegram scams include Fake Telegram Groups, Free Giveaway Scam, Telegram Takeover, Telegram Phishing, etc. These scams are not that different from Discord scam types as both Telegram and Discord are communication platforms with basically the same setup features conducive to specific scams.

Conclusion
If you are new in the world of crypto, try to familiarize yourself to these scam types. If you are a scarred, war crypto veteran, well a refresh won't hurt.

At a high level, you should exercise caution! I am sure you have heard of the old adage, TRUST, BUT VERIFY. Well, that does not apply to the crypto world, unfortunately! You need to accept that the pseudonymous nature of the crypto world makes it impossible to even trace the scammer once he has done his deed. Hence, DON'T TRUST, JUST VERIFY is the more applicable stance. A scam is a ruse, plain and simple. So to counter a ruse, you need to do verification and cross-checking - the works. But, in short, you need to verify the Triple P (3P) - the Person, the Project, the potential Profit.

I love crypto to bits. It offers a lot of opportunities. But, I am investing money I am okay to lose. You should, too. Watch out for yourself out there. 

My next articles in this series will go deeper into each of these scams. We will try to establish how each scam is initiated, why crypto folks are vulnerable and what to do.

Hope I was able to provide some useful insights. If you reached the end of this article, thank you. Please show your support with a like, comment or a tip. It would be greatly appreciated.

 

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Marcusblue
Marcusblue

Crypto enthusiast. Not a financial advisor. Enough about me, let's talk crypto.


Get Your Keys, Get Your Coin
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