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How to avoid cryptocurrency scam? The easiest way is to stay home and not play with your hard earned money. But if you are determined to invest in a riskier world of crypto, you need to be aware of some common fraud. Like any scam, getting out of the guard will strike you. I do not want that. Here are five common frauds and how to avoid being captured.
(1) Ponzi scheme and Pyramid
In the spring of 2017, the company headquartered in Mumbai, named OneCoin, gave an argument to the investor's room. Indian police officers broke into a meeting and finally closed 18 Onegin's officers for the Ponzi's cryptosystem operation. At the time of their arrest, OneCoin has already transferred over $ 350 million through the payment processor.
Bitcoin scam scam
Investors were lied to by a combination of delighted sales, inadequate knowledge of technology and favorable media coverage.
Many people have lost a lot of money. And we like to think we're smart enough to see a scam before us. But crypto-valency creates new scams, using the jargon and technology most people have never heard, let alone understand. Understanding the fundamentals of blockchain technology and smart contracts is difficult to lay.
(2) Nonexisting Coin
In August 2017, London City Police closed a "business secret" calling people to sell a fake digital currency. The victims were cold-pressed and convinced to buy non-existent cryptococcus. Nine casualties occurred in an American company, Action Fraud, with a combined loss of over 150,000 pounds.
The man who set up a scam would use an address in the center of London at the financial center to give the scam authenticity.
Actual investors will not be too cold to offer you an opportunity, a cryptic currency or not. When or if you receive a call to invest in a project, name and business address, write down the name of the caller, and lower the phone. The following request should be a DIP for reporting potential securities fraud.
followers
Social media grow a threat. Big accounts of the cryptosecurity companies are excited on Twitter and Facebook. Scam sites directly contact individuals, ask them to invest in your project or buy Bitcoin or Ethereum at a reduced price.
scam Twitter account bitcoin
These addresses are, of course, fraudulent. Please note the duplicate was underlining on the above images? These two accounts suspended.
(3) ICOs
Initial Cash Offerings (ICOs) are IPOs of cryptocurrencies. Startup cryptocurrencies create initial money supply to raise substantial amounts. However, many of them overestimate the value of their launch. Others are merely sophisticated pumping and disposal systems.
The Securities and Exchange Commission (SEC) is hugely suspicious of ICOs. They advise you to suspend transaction on inventories Like:
• There is no accurate or current company information.
• There are questions about the accuracy of information available to the public, including press releases and media coverage.
• There are questionable business practices, such as trading with insiders, manipulating the market, and so on.
Of course, this does not always protect potential investors from fake ICOs, as we've seen before at OneCoin. Due to the market hysteria surrounding the ICO and the potential for significant short-term profit, many fraudsters are trying to take advantage. Businesses can also advertise their ICOs before the technology is ready.
DAO
When DAO (a decentralized autonomous organization named after the acronym) completed its ICO in 2016, raising more than $ 34 million, it was considered a success. That was until some users exploited the DAO vulnerability and transferred one-third of CAD funds to another account. Return funds to the original statement, Ethereum's community had to accept a hard fork, whose crypto-valence was half.
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DAO is now removed from the primary exchanges list and is considered as the primary factor in the SEC (which is necessary) to re-examine crypto transparent ICOs.
There are excellent ICOs
Again, I do not want to broadcast FUD without giving positive information about ICOs.
More recently, Filecoin has collected more than $ 200 million for its decentralized storage system based on blockchain technology. Filecoin also had very impressive supporters, including Winklevoss Capital (owned by twin Winklevoss), Sequoia Capital and Andreessen Horowitz.
There are some very promising ICOs on the horizon - but, as we have just seen, precisely it's hard to know what to believe without extensive research.
ICO Ban
ICOs also published information (cryptography) after China and South Korea took steps to ban them. South Korea's Financial Services Commission has stated that institutions and individuals carrying out ICO-related tasks will face severe sanctions.
This decision came after the Chinese government banned all ICOs, calling them the illegal collection of funds. China is also concerned about the fact that the crypto may of power is offered to its citizens. Anonymous, decentralized currency in the form of ICO (and other altcoins) could easily disrupt their social order. China has already banned activities related to Bitcoin and cryptographic value, each time causing the global market to fall.
(4) Pump and Dump
Many leading financial experts have also dismissed the cryptos as a scam. While some compares Bitcoin with other safe investments, such as gold, others believe that it is only a speculative refuge, a pumping and damping mature.
Join my new pumping and disposal team to make money # pump @ dump #crypto #cryptocurrency
- David Wright (@ Davidcrypto4) October 1, 2017
Bitcoin has a market capitalization of more than $ 70 billion at the time of writing. It would be very difficult to control the price directly. But smaller alikini are extremely vulnerable to standard pump and discharge.
In many ways, thousands of small chains have replaced stocks listed in the coin, but with a technical advantage. In addition, several groups are devoted to this practice. They vote for a month to choose another small market capitalization and go down.
But is cryptocurrency bad? No, but you just need to be careful