If you have been in the cryptocurrency arena for a while, you have probably come across your fair share of scams, as some fraudulent projects such as “Bitconnect”, “OneCoin” and “CentraTech” have completely played their part in scamming many investors.

How to distinguish and know if cryptocurrency is a serious project or just a scam?

First of all, knowledge is by learning, and with knowledge it becomes difficult to deception and fraud, despite the skill of fraudsters in fraud and deception, but with an enlightened and rational mind, they can be armed against all forms of fraud.

Below we will review some of the methods used in fraud and show their types in order to prevent and protect against them and from falling into their nets.

Read:Galaxy Digital acquires BitGo for $1.2 billion

Types of cryptocurrency fraud:

cheat out:

Unfortunately, exit scams are one of the most popular types of crypto fraud for a reason, and exit scams are meant to disavow and get the owners out of the project.

In the days of the initial coin offering (ICO) boom, exit scams became so common, founders would generate so much buzz about their project that they would disappear as soon as the investors handed over their money.

These types of scams often take the form of ponzi schemes, Where the investors are counted on to bring their owners from the victims.

Unfortunately, fraud can be difficult to detect when it is the enthusiastic person who is marketing it.

Project OneCoin and BitConnect demonstrate how successful this plan is, raising $4 billion and $2.6 billion, respectively.

However, other schemes can be used, such as in CentraTech, which used the marketing services of celebrities like Floyd Mayweather and DJ Khaled to sell its scams.

Both ended up in a dispute with the Securities and Exchange Commission over charges brought against them for their role in promoting the fraudulent project.

Read:Kryptoin Resubmits Bitcoin ETF Application to SEC for Review

Cryptocurrency exchanges have taken their share of exit scams.

Last year, the CEO of cryptocurrency exchange IDAX disappeared with user funds, and there are still some who believe that Quadriga CEO Gerald Cotten’s death was fabricated as part of an elaborate exit.

Twitter scam:

Twitter scams usually involve someone pretending to be an industry leader in an attempt to get people to send them their cryptocurrency.

The process does not necessarily involve a person inside the crypto sector, as celebrities in other fields may be targeted as was the last time with the Paris Saint-Germain footballer “Kylian Mbappe”, who was targeted several times by crypto scammers using his name to enhance their efforts to get their way. .

Cryptocurrency scam linked to a famous football player

Targeting private keys:

Generally, these scams aim to get people to hand over details that will give the scammers access to the funds.

In the crypto world, the target could be the private keys of wallets, or perhaps the login details of your exchange accounts, scammers will play the role of official representatives of a company or project in an attempt to appear legitimate.

Read:7 Popular Payment Gateways for Using Bitcoin and Cryptocurrency for Purchases

Cryptocurrency security expert Harry Denley recently warned of the dangers of using QR code generators for bitcoin addresses, where instead of generating a code for the address you provide, they will generate codes for their phishing addresses, and once the money is sent there, they cannot be retrieved.

Users Lose $45K in Bitcoin Because of a Fake QR Code … Learn the Details

Fraud detection tips:

Although scammers are well known for creating an aura of legitimacy, there are some lessons that can be learned from previous schemes that can help you avoid the scams themselves.

The question about who is behind the project?

The principles of anonymity and privacy in the cryptocurrency space are important, but when it comes to handing over money, it’s best to know who you’re dealing with.

Research the company, founders, and project team, check their LinkedIn pages, and Google to see if there are any reasons to be suspicious.

It may also be useful to know whether the company is registered in a reliable legal environment or not. In some countries, company directors are required to disclose their biography and past projects. Often, this information may indicate the knowledge of the project owners.

If you have been contacted on social media, especially by anyone claiming to be involved in another cryptocurrency project or initiative, check the profile carefully.

Many founders or project leaders will link to their social media channels from the company website, so this is an easy way to check if the characters match.

Never give your private keys to anyone no matter what they promise, if someone demands that you deposit cryptocurrencies for greater returns, you will likely never see your money again.

Partnership:

Many crypto projects sing that they have made many partnerships with big and well-known names such as Amazon or Google, but in fact they may just be their users and customers.

For example, in the case of CentraTech, the company was caught claiming its partnership with Visa, which a Visa spokesperson categorically denied.

Check the project on news sites:

Cryptocurrency news websites are full of paid press releases and undisclosed sponsored posts.

Several projects point to these news pieces as evidence of their popularity.

As a tip to consider, it is useful to check the type of press articles about the project to see if they are written objectively, or were published as part of a PR campaign.

While there is nothing wrong with paid PR, an unbiased review from an independent third party gives more weight in determining whether a project is good or not, which is what we try to do at Arab Bitcoin website.

Reach the moon?

Of course, we are talking here about encrypted digital currencies, and the phrase “this currency will fly towards the moon” is a common phrase, so you should pay close attention when you hear it.

It is looking for the objective reasons that will make this coin fly to the moon, or is it just propaganda for parties affiliated with the project whose goal is to deceive and gather the largest possible number of investors, and then instead of going up to the moon, it goes down the lows.

These were some tips and guidelines that make its reader familiar with even a small part about the process of fraud.

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