Overview of Scam
What is scam?
The term Scam in English means "Fraud" - refers to a bad action in which individuals or organizations deceive others to appropriate assets such as cryptocurrency. Individuals or organizations commit acts of fraud. en Scam is called Scamer and will be subject to appropriate penalties if investigated and convicted. Today, the development of the internet and internet-connected devices has led to the development of of forms of fraud and are increasingly more sophisticated and complex than before. The scale of fraud in the cryptocurrency market can spread to many countries with the number of fraud victims potentially reaching millions.
What is Scam?
When participating in the cryptocurrency market, the phrase "Scam" is too familiar to investors. It refers to when investors have fallen into a scam trap.
Most victims do not realize they are being scammed or some victims, because they want big profits, still invest with the goal of "high risk - high return".
For example: Some projects operate in a Ponzi model where the latter pays the former so the earlier you invest, the more profitable it is. At that time, many people realized that this was a form of fraud but still accepted to participate because of the desire for immediate profits. However, when this model no longer has new participants or the number of members is too large, the model can no longer be maintained and collapses, causing risks of loss for investors.
Distinguishing forms of Scam
Scam ICO
ICO scam is a common fraud due to the explosion of ICO projects in 2017. The operating model of this type of Scam is extremely simple as Scamers will launch a new cryptocurrency project and spread propaganda. , advertise the project with calls, promises or hire promotional KOLs to attract community interest and create credibility.
After that, the project will issue coins/tokens through an ICO to mobilize capital from investors to develop the project. After successfully raising a large amount of money from investors, the scammers will abandon the project, take the money with them and disappear.
Below are some signs of Scam ICO such as:
The project was built without clear solutions or practical applicability.
The project does not really need Blockchain technology
The development team hides their identities, lacks experience, or has scammed in the past.
Sketchy website/whitepaper construction project.
Roadmap is not complete or clear.
The project lacks integrity and does not care about the community.
Withdraw liquidity
The liquidity withdrawal scam model often occurs on decentralized exchange (DEX) projects.
In the initial stages, Scam projects often invest in building very complete and methodical products. After that, the project will issue coins/tokens and list them on exchanges on liquidity pools such as Sushiswap, Uniswap, PancakeSwap,...
Signs to identify Scam projects in this form are as follows:
Low liquidity
Floating liquidity
Promises high APY interest rates
There are also other popular Scam models such as locking the buying/selling function of tokens or hacking the project itself to release large amounts of coins to the community.
Avoid scam projects
Investors need to carefully research the project before investing, such as how to build project solutions? Does the project really need Blockchain technology? Or how to build communities and investors? How is Tokenomic?
Currently, there are websites or tools to help check projects to ensure they are not scammed in simple ways.
You can check Smart contracts to check if holders or founders have bad signs affecting the project.
In addition, when connecting your wallet to a website you need, you must pay attention to whether this website is truly reputable and ensures the safety of investor assets. After you are no longer needed, you need to revoke to avoid being taken advantage of and appropriating your assets.
summary
Through the above article, Trading Insight has introduced you to what is Scam? Recognize forms of Scam to protect your assets.
Hope the above knowledge is useful to you. Wishing you successful investments!
If you have any questions, please comment below the article to discuss with Trading Insight.