Beware of cryptocurrency scams. They are very good at convincing people to join and then stealing their assets. They can be found everywhere in the crypto landscape and we must all be very careful.
This week it was reported that a Chinese fraud 'Ponzi' type scheme that stole almost $3 billion from investors is now dumping its bitcoin holdings on the market. This may be contributing to the recent overall market turndown. Over 10 million members were convinced to open accounts, lured by promises of high returns and big bonuses for bringing in other members. This is one of the largest cryptocurrency frauds we have ever seen.
Some advice, to avoid such scams:
- If it sounds too good to be true, it probably is. Beware of any project that guarantees or implies high returns.
- Don't be used to draw in other victims. Be concerned if there are unusually high rewards to bring in other investors. This is a hallmark of a 'Ponzi' type scheme
- No matter how good the marketing, use common sense. Always ask yourself where the money is coming from and beware of 'high pressure' type selling tactics
- Size does not matter. There are small scams and as the latest $3 billion fraud proves, there are massive scams. Just because many others are joining a project, it does not mean it is legitimate. Always consider the fundamentals and not the size
- If in doubt, ask a security or fraud professional for their opinion.