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Cryptocurrency Scams to Watch Out
Investors beware
Aaqib Javeed
By Aaqib Javeed
Jan 20, 2018
4254

As the market of cryptocurrencies boils with increasing influx of capital, investing or speculative, the number of scams and frauds is also mounting at an alarming rate.

The investors are not leaving any chance of investing into cryptocurrencies as they believe that it is going to give them more profit than any other investments like mutual funds, retirement funds, stock markets, etc.

But here they make an err.

Before investing into cryptocurrencies, a lot more care needs to be taken as there is no central bank or government authority who is overlooking this mechanism and hence, there are more chances of fraudsters getting away after scams.

Ever since Bitcoin was created in 2008, there have been fake companies trying to ride on the enthusiasm among investors to invest in Bitcoins, resulting in creation of scams. These scams have further led to the erosion of trust in Bitcoins by various governments of countries. Though the problem is not the cryptocurrencies but the absence of knowledge among investors how and where to invest.

Most of the scams of ten revolve around Initial Coin Offerings (ICOs) as new coins offer a chance to buy at discount prices.

Never make the silliest mistake of giving your precious money to someone who has promised you to invest that money into cryptocurrency. If you don’t hold private keys directly, then it’s probably a bad move.

There is a separate section on website ‘cryptocoinsnews.com’ titled Bitcoin scams which highlight hundreds of scams over recent past. On 22 November only, South Korean police busted $38 million ponzi scam. The group targeted new investors in the crypto market who had no understanding of cryptocurrencies. The scamesters promised investors to pay out nearly 200 percent in profit on a regular basis, if they invest using Bitcoin.

The Australian Competition and Consumer Commission said in November that Bitcoin Scams are up 126% in first week of the month. Post-incident, the authorities began the process of revising existing laws to include bitcoin exchanges under a regulatory purview.

Let’s see the top 5 Cryptocurrency Scams:

1)        Onecoin

Onecoin is a ponzi scheme-based token that runs on a private blockchain managed by the Gibraltar-based Onecoin Ltd. Its company stole more than $50 million in about one year of illicit sales that happened due to a strong Facebook marketing strategy. The scam was first revealed in China and Italy.

2)      LCF coins

LCF Coins are promoting themselves through Google Forums selling more than 600,000 products without having any website or social media presence. But Rothschild & Co has recently warned against investing in this cryptocurrency, saying it may be a scam.

3)      Centurion Coin

Centurion Coin has opened a charity foundation. On its website, there are team members, but the identity of the people who control the scheme is hidden. This ‘charity’ was donating 5 million tokens on the market. Doesn’t that sound incredibly suspicious?

4)      Earthcoin

Earthcoin is the most dangerous scam because it is even listed company on coinsmarketcap. But the coins are pre-mined and even insta-mined, suggesting that the coin’s initial supply is generated automatically before the public launch.

5)      S-Coin

S-Coin (Coinspace) is selling 12,000 packages of tokens, but their value is not attached to any entity and without the basic tenets behind supply and demand, it gives us all the signs of a scam.

There are other ways that are commonly adopted by scammers and potential investors should also be alarmed of.

Fake wallets

Be careful of fake wallets that steal your coins. Make sure to use official wallets endorsed by the companies and follow carefully the instructions mabe by the company.

E-Coins

The difference between cryptocurrency and E-Coins is that the former is stored on distributed networks and use blockchain technology and the latter is under the provider’s control on its own servers.

Phishing

This is the oldest tactics used by scammers to impersonate as a developer team and offer “special rates” for new token sale. Recently this ICO scammer was found out who scammed $10,0000, he was later identified by the Etherscan who labeled him as Fake_Phishing58.

How to protect your investments

Before your cryptocurrency investment, read this websites such as ‘badbitcoin.org’ to see if that crypto is already registered as a scam. An investor should do a lot of ground work and be careful about ICOs and unknown companies selling tokens on the web.

 

   

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