- How do you identify crypto scams?
- In the first half of 2024 alone, security incidents cost the sector about $1.19 billion
- Five important ways to avoid crypto scams
In the world of crypto, scams have become an everyday thing. From fake projects to impersonators and hackers, unsuspecting members of the public lose their funds.
In a country like Nigeria, where poverty is rife, people are always on the lookout for ways to make money with little investment. This desperation has led many to lose the little they have.
But it’s not only in Nigeria or Africa. The menace is global and in the first half of 2024 alone, security incidents cost the sector about $1.19 billion, while more than $900 million was stolen via seed phrase compromise attacks and phishing, according to a recent CertiK Web3 Security Report.
But the big question is, is it possible to stop these scams? Or should people focus more on staying safe and taking measures to protect their assets? Well, the former is for law enforcement to answer, while the latter will be answered in this article.
Yes, people should focus on staying safe online and taking measures to protect their crypto assets and this article will attempt to explain five things to look out for to avoid crypto scams.
How to identify crypto scams
Here are five ways to identify crypto scams.
Do your research
Research. Research. Research. One of the best ways to stay safe and protect your money is to do your own research. In the crypto world, some dose of healthy skepticism is needed. Don’t believe anybody completely. Don’t believe any project completely; do your own research. Devote time to study and understand any project or platform before investing your money.
Verify the project's regulatory status, reviews, and the legitimacy of the team working on it. Reputable sites like CoinMarketCap and CoinGecko can offer insightful data; use them.
Read the Project’s White Paper
The creation of cryptocurrencies involves a process. Prior to this procedure, the public is typically given access to a published document known as a white paper. If the white paper is authentic, it will explain the blockchain and protocols in detail, along with the formulas and how the network as a whole works. White papers from phony cryptocurrencies are not well-written and well-researched. They are usually poorly written, with figures that don't add up.
If the white paper reads like a pitch with a lot of high and unrealistic promises of flying to the moon within a few days or weeks, ignore it. It's probably a scam. Also, check if the project is registered. Genuine projects most times are registered with the Securities and Exchange Commission, though there are a few genuine ones that are not SEC-registered.
Identify and research the team members
With the internet readily available, anyone can easily find nearly everything. Before you believe in and invest in a project, identify the team members.
White papers always identify the people behind the projects. Although there are situations where an open-source crypto project may lack named developers, GitHub and GitLab allow you to view the majority of code, comments, and discussions. Certain projects facilitate communication through forums and apps like Slack or Discord. If you are unable to find anything on the white paper or on any of these platforms, get down; it is probably a scam.
Beware of free gifts
Always remember that there are no free gifts anywhere, not even in ‘Free Town’. Several fraudulent crypto projects use the tactic of giving people free coins by dropping them in your wallets. But remember that nothing is ever free and cryptocurrency is no exception. If you get it free, you will pay for it in another way.
Study the marketing strategy
No legitimate blockchain and cryptocurrency project grows overnight. Growth takes time and resources. Sometimes the projects seem to fail but with the consistency of the developers and the community of supporters, they eventually succeed.
Most great projects do not have a lot of money to pump advertisements and do some aggressive marketing.
If that project is all over social media, calling itself the next best crypto, just a few weeks after launch, without talking about important and legitimate issues they are trying to solve, then that’s probably a scam. Run.
How to avoid crypto scam
- Do not give out passphrases or private keys: These sets of words hold the key to your cryptocurrency assets. With them, anyone can have access to your assets. Store them carefully offline, preferably in a hardware wallet.
- Watch that URL carefully before visiting the website. Scammers create fake websites that look like legit ones. Watch the URL carefully.
- Avoid projects that promise a lot of money in a short time.
- Be careful when you see "celebrities" in your DM. Most real celebrities will not contact you. That person in your DM is probably a scammer who wants your crypto assets.
- Do not share your personal details: No matter how hard they try, do not disclose your personal details. Do not type them in and do not submit them. For highly sophisticated scammers, typing in your details or passphrases in a provided box is enough for them.
Crypto scammers posing as Coinbase steal $1.7 million from user
Meanwhile, TheRadar earlier reported that scammers who impersonated the popular United States-based cryptocurrency exchange, Coinbase, have swindled a user of the exchange out of $1.7 million. At least three users of the platform have said the scammers have targeted them.
In an X post, Tegan Kline, co-founder of Edge & Node, said the swindled person is her “good friend”, whose self-custody wallet had been depleted of $1.7 million the after they were duped into disclosing a portion of their seed phrase.
