Scam is a fraudulent scheme involving money, crypto or some sort of business transaction that you actually authorize in order to obtain specific goods or profit that are never provided. A scam is when someone deprives you of your money through misleading, psychological manipulation, deceit and deceptive practices.
Rug Pulls – A rug pull occurs when crypto developers abandon a project but keep the funds raised from investors. Usually, the new token is listed on decentralized exchanges. The scammers will use social media to generate interest from investors and once enough money enters into their token, the developers scratch the project and run away with investor funds.
Rug Pulls in NFTs – same scheme. Creators will use social media to promote a project and find investors and buyers, once they got the funds they abandon the project and disappear with the money.
Fake crypto exchanges – usually have fake dashboards where victims will be progressively shown increasing “fake” gains over their investments, which further encourages the victims to continue adding more and more funds to their portfolio. Later the crypto withdrawals are rejected, and they will ask to pay a fee to unlock your limit however the victim will never be able to remove her/his money.
Fake crypto – developers will write into the smart contract a clause that says their new cryptocurrency cannot be resold at all. This gives the scammer complete control of the new token’s price. To start the ball rolling, scammers simply buy the token themselves at steadily increasing prices. Any investor who joins in the game will find themselves unable to sell, meaning the price cannot be pushed down. Example: Squid Game token
Ponzi schemes – a fraudster will convince individuals to invest their money in a project or a sort of investment, promising a high rate of return. Those who have invested are encouraged to bring other investors and are promised to receive a percentage from their profits. The new investor’s funds will pay the first investor and the ponzi schemes inventors, and the scheme will continue to run until there are no more new investors to fund the scheme or until the underlying funds run out.
ICO scams – developers will collect the funds of early investors only to abandon the project shortly after.
Transferring cryptocurrency directly to a scammer due to impersonation – a person who pretends to be an investor, trader, broker or businesses or government institutions.
Phishing/spoofing emails – Phishing is one of the most popular forms of deception used by scammers. It targets information about online wallets authentication credentials. This means scammers try to get information that gives them access to a digital wallet or other types of private information such as security codes. They send emails/SMS with a link to a specially created website that asks them to enter private key information. When the hackers have acquired this information, they can steal the cryptocurrency contained in those wallets.
Fake websites offering guaranteed returns for which investors have to invest large sums of money. For example, fake websites for ICOs, mining farms, NFTs… The transactions look legitimate but will actually send money to criminals.
Peer-to-Peer come in a variety of forms.