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Many of the Cryptocurrency Scams happen Because of the Victims Faults


Mar 27, 2018 Posted /  2614 Views


Many of the Cryptocurrency Scams happen Because of the Victims Faults

The Different types of Cryptocurrency Scams

Shaddy Cryptocurrency Exchanges. Exchanges are among the most common avenue where users of scammed of millions of dollars from several accounts. The popularity that cryptocurrencies have gained has seen a huge rise in the lucrative cryptocurrency exchange business. Exchanges basically make their money by charging customers transaction fees for every exchange they make.

Some cryptocurrency exchanges, however, are not completely trustworthy have had set targets which once reached would trigger them to close the exchange and disappear with customer deposits. Cryptocurrency scams through exchanges alone account for more than $3.5 billion dollars in losses within the cryptocurrency industry over the past few years alone.

Pyramid and Ponzi Schemes. The most recent in this category is that of a Mumbai-based company OneCoin which robbed investors of more than $350 million dollars before the perpetrators of the malicious investment scheme could be brought to book by the Indian Authority.

Ponzi and Pyramid schemes always lure investors to put more promising some abnormally huge returns after short periods of time. Other Ponzi schemes that caused a lot of losses to people include the MMM investment scheme spearheaded by Russian fraudster Mavrodi.

Pump and Dump. many financial experts around the world to date still think that cryptocurrency is a scam with others comparing bitcoin to other safer investments such as gold, stocks and real estate. In a pump and dump scenario in the price of the commodity is manipulated for the benefit of some group of people who would collect as much money as possible before dumping the asset. Bitcoins market has grown to more than $400 billion making it hard to manipulate it. However other smaller bitcoins can be easily manipulated.

ICOs. Another method commonly used by scammers to exploit unsuspecting victims of their hard earned money is via Initial Coin Offerings (ICOs) which are the IPOs of the cryptocurrency world. Startup companies in the cryptocurrency space create an initial coin offering to raise capital investment for their ventures which are always the substantial amount of money.  However it should be noted that not all ICOs are legitimate, some projects are run by known scammers who rob investors of their money then disappear into thin air.

Many startup companies would pronounce their ICOs before even the technology that will constitute their businesses are ready and tested. Recently the Securities and Exchange Commission (SEC) is extremely wary of ICOs. The regulator has warned that it would suspend the ICO if certain set conditions are not met.

How to Stay Safe from Scammers

However, it is worth to notice that there are safer ways of investing in cryptocurrency businesses and ICOs. Generally, it is wise to obtain as much information as possible before investing in a new venture. There are some sites out there where information about cryptos are published


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