Knowing These Five Types of Scams Helps Me Stay Ahead of Scammers

Ensure the safety of your Crypto assets by protecting them from these scams

Are you new to Crypto? Do you often feel that Crypto is very risky, not in market volatility but fraud and theft?

Have you been a victim of Crypto fraud in the past? If you have, I can understand how painful it is to see your assets stolen just in the blink of an eye.

Scams are widespread in this space. The above problems are very common to people dealing with Crypto; they are daunting and probably a deterrent to not participating in Crypto for any beginner. These thoughts come to everyone’s mind, but we rarely seek out any solutions to discard the fear.

Frauds or scams are prevalent in today’s digital era, especially when an investment avenue is lucrative and new. Scammers evolve and adapt very rapidly to keep their endeavors profitable.

Therefore, while some scams are easy to detect, some are very subtle and convincing.

In this article, we will cover five crucial points that will help you identify the potential fraud or avoid the fraud risk.

  1. Ponzi Scheme:

Although these schemes are not very new, people find it challenging to identify a real Ponzi scheme in the Crypto space. The difficulty is due to their broad exposure to social media and lucrative but not very alarming incentives.

The most common form of scam in this type is interest-paying schemes. The Ponzi firms maintain a legit website, and the plans run for months to gain investors’ trust.

They draw attraction by providing investors with a very lucrative interest scheme and widespread marketing of their products. However, after a few years, they close the operation and run away with all the invested money in the platform. Famous examples include Bitconnect, Bitclub, etc.

Avoiding such schemes is a matter of habit and familiarity. Nothing is guaranteed in the financial world; even the Provident Funds’ interest rates vary. If any plans guarantee a lucrative return, the scheme is likely a Ponzi.

Another form of a Ponzi scheme is the likes of trading bots. They claim that they have a unique trading strategy style that can double or triple or give you insane returns within a short period.

But the catch here is this:

If they have such a unique strategy, why would they need your money? They can very well invest on their own and gain hefty returns. So, it is easy to identify such scams.

2. Phishing Scams

This scam is again one of the most common scams which infest the Crypto industry. Such scams are generally created by duplicating the website of interest, such as the Exchange website, other website platforms where investors park their money.

These scams are so convincing that even a well-informed investor may fall into the trap. Scammers create a duplicate website with almost identical domain addresses except for a few changes to steal your log-in credentials; the result is obvious.

These changes are often very subtle, which we generally overlook. These changes are in letters, numbers, symbols, etc. Here are a few examples: Legit website Notice the extra “n” in the address.

Similarly, such scams are created by inserting “_” or Unicode characters. This use of Unicode characters to attack a domain is also called a homograph attack. Scammers use different combinations, such as Latin and non-Latin characters, which look identical to other characters. Here is an example of a homograph attack.


Can you spot the difference? Which one is legit?

The first one is a phony link created by using Unicode characters. Do not worry! You can click the link here as the fake link has no valid domain and is thus safe.

One can avoid this scam by enabling two-factor authentication such as Google authenticator. It will provide you with double security and thus credentials are often safe because of the automated response from authorities controlling the authentic website.

3. Giveaway Scams:

These scams create a pressure tactic for investors. Thus, many investors fall prey to such scams; they show the number of giveaways left and constantly update it with decreasing numbers to create urgency in investors’ minds.

Scammers here lure investors by promising “2x” money in return for “x” money transferred. For example,

Transfer 1 ETH: Get 2 ETH

Transfer 100 DOT: Get 200 DOT

“Only 100 ETHs left.”

Such scams are created by constantly impersonating famous influencers through social media such as Twitter, Youtube, etc. For example, they add your profile to a list of giveaway contests on Twitter. On Youtube, they run a live stream rebroadcasting an influencer’s stream/interview encouraging users to participate in such giveaways.

When in doubt, ask yourself,” Is there really something called free lunch”? No one wants to give money for free!

4. Wallet Scams:

Private wallet scams are evolving at a much-increased rate. Scammers often find a new way to create phishing attacks. Thus, investors need to familiarise themselves with such new forms of potential attacks.

Spend a month over in crypto space, and you will know the need for private wallets(hot and cold).

Scammers often create ads of fake Private wallets on Google or other search engines. These fake private wallet websites look identical to legitimate ones. Once you install these fake wallets, your assets will disappear faster than you think.

Thus to avoid such scams, never click on any search ad links. These scams are prevalent in both hot and cold wallets.

If you want to install any private wallets, go to their official websites. You can visit their official websites through links provided in some well-established Youtube influencers’ channels.

Once you see and install the wallets, you can bookmark those for future use. This way is one of the safe methods I use.

5. Dapps Scams:

When you even have installed a legitimate wallet, your crypto assets are still vulnerable to scams. These scams are targeted by professional hackers who have extensive coding experience.

With the widespread use of crypto projects as decentralized apps(Dapps), scams are also prevalent in the form of identical fake Dapps. These fake Dapps look exactly like genuine ones and are often in the ad link in Search engines.

Moreover, these ads are shown on authentic news websites; the hackers use homograph attacks to match the characters’ appearance used in the domain address. Scammers use Smart contracts(hidden code) to allow them to control your assets. Thus, your assets may disappear instantly.

If you have no coding experience, it is challenging to identify such hidden codes in the smart contract.

Hence, it is safer to use only Dapps through some trusted source, as I discussed by visiting the Youtube influencers channel.

In addition to these fake scams, new Dapps are also prevalent, with ulterior motives to steal your crypto assets. These Dapps are introduced as new ventures and legitimate projects.

However, they are often a form of “Rug pull” through which scammers collect investors’ money and abandon the project, running away with investors’ money. These scams are prevalent in DeFi protocols.

To avoid DeFi rug pulls, you can visit this website to check the rating of the projects in terms of authenticity and risk.

Apart from the scams mentioned above, scammers also commit fraud through comments on Youtube channels of famous Influencers. They comment impersonating the influencers and providing you with a link or contact number through which phishing attack occurs.

Closing thoughts:

Scammers are professionals, and this business has become a technical profession. Thus, even when we are aware of the most common forms of scams, there are always new ways to do cons. Therefore, it is essential to constantly update yourself with the latest developments of scams and phishing attacks.

I will leave you with these key takeaways and a final thought.

– Money is not free. Turn 180 from those who promise you free money.

– Never reveal the seed phrase(secret recovery password) of your wallets.

– Never respond to personal DM on Twitter or Telegram if they appear to be messages from famous influencers. Most likely, they are scammers.

– Never believe in any fixed returns in the financial world. No one can provide guaranteed returns in this space.

– Never respond to comments on Youtube asking for money in place of a unique trading strategy that can multiply your returns. If they have one, they probably won’t message you.

“Learning is not a goal but a continuous process; the more you do, the more you want it.”

Disclaimer: None of the content, in part or whole, articulated here is any financial advice. This article is about personal investment philosophy and a medium to generate awareness in the financial journey. Please consult your financial advisor before making any financial decision.

Apologies for the above disclaimer!

I hope you enjoyed the content and was worth your time. Not happy! Please let me know. But, if you liked the content, you know what to do. For more articles and updates, you may follow me by clicking “Follow” or subscribe to my newsletter.

Schedule a DDIChat Session with Parash Sharma at the link below.

Parash Sharma – DDIChat

Apply to be a DDIChat Expert here.
Work with DDI:
Subscribe to DDIntel here.

Knowing These Five Types of Scams Helps Me Stay Ahead of Scammers was originally published in DataDrivenInvestor on Medium, where people are continuing the conversation by highlighting and responding to this story.