Over the years, the crypto industry has witnessed many scams. These scams evolve with new developments happening in the industry as it progresses. However, it is our duty to make people aware of these scams – the features, tactics, and baits – so that you will not fall victim of these fraudulent crypto acts.
Here are three common types of crypto scams to avoid in 2019.
AWS Mining: Despite the claim on its website, to “promote financial freedom through the use of cryptocurrency”, AWS has offered many unrealistic promises that invalidates the systematic operations of cryptocurrency. The company claims that no matter what plan you choose, you would earn 200% increment of your investment, which would be on a daily basis. Familiarity with cryptocurrency exchanges will make you know that this is an unrealistic promise. The system expects you to register and select a type of contract to join. The bait is the reward; it is a scam-trap.
There is no traceable information about the company and its directors
There has been a cease and desist order on AWS Mining by the Security Commissioner of Texas
Alexa data shows that there was no traffic coming from Australia, which is the assumed location of the company’s headquarters.
Ponzi Schemes: Ponzi schemes are not difficult to spot. Usually, they promise large returns without you having to do anything other than invest; no business activities involved. Furthermore, a distinctive feature is that it largely depends on referrals for you to get paid. The more people you bring or refer, the more you earn.
Ponzi schemes are an attraction with a sweet-tongue to cajole you into becoming a part of an existing financial train and investors. Ponzi schemes reward high values, initially, to attract people. The rewards are unusually high and they collapse eventually.
Your money or coin offering are not used for any transactions
They promise Quick Returns
You require referrals to keep earning
Fraudulent ICOs: An Initial Coin Offering (ICO) is a fundraising method by blockchain startups that involves the sale of a digital token to early backers of a project. They expect investors to buy their offering with traditional currencies or an existing crypto coin such as bitcoin or ether.
However, fraudsters organize ICOs to attract investors, after which they would disappear with the funds they have gathered without launching any app or token. You can identify these frauds by their whitepapers, which contains their details, teams, roadmap, and intentions with the collected funds. How do you identify fraudulent ICOs? Simple. Look and study their whitepaper. Hurriedly composed whitepapers are filled with mistakes, contradictions, and unrealistic promises that can be easily spotted. Verify staff/teams via the internet, read terms and conditions to see if their claims are legal.
Whitepapers can be duplicated with an existing company’s
They are evasive with details and questions
The members of the team are mostly incognitos
There are often mistakes, confusion, and contradictions presented
The prices for coin offering and trading are flexible or negotiable
Unrealistic promises are made