Over the years, cryptocurrency trading has reached a whole new level, whether with professional investors or just curious individuals. But as you know, this rapid growth has its share of scams.
Imagine Sarah, a young professional who just started cryptocurrency trading because she heard about the possibility of very high returns. She comes across an ICO that promises her incredible growth and the possibility of investing early.
The website seems okay, full of flashy marketing and whitepapers, so she goes on to invest a lot of money from her savings account in a very short period.
In a matter of days, the website was gone, and none of the presumed team members could be reached. Just then, Sarah realizes she fell for a scam.
Well, she lost the money, and the pressure of getting started early including the excitement blurred her judgment, so she wasn’t able to research whether the project was valid or not.
This guide will help you observe crypto scammers and avoid falling prey to their traps and deceits, making your journey through this landscape safer.
Table of Contents
What Does Crypto Scam Mean?
There are, in fact, basically two kinds of cryptocurrency scams: either those that attack the digital wallets or one’s credentials. The tricksters in these cases would attempt to access your wallet access details, security codes, or something similar to steal the funds or sensitive data.
Who is a Crypto Scammer?
A Scammer often poses as a new or established company and announces the availability of some fake crypto coins or tokens. They will announce that a company-owned cryptocurrency is coming out and will make sure to give it an overall show of authenticity with things like flashy social media ads, convincing news articles, or a professional website to convince people to buy into their business.
Increasing Rate of Crypto Scams
As cryptocurrencies get more popular, they have become one of the primary targets for scammers. The decentralized, and very anonymous nature of these digital currencies means it’s gradually become more difficult to trace transactions, which is, of course, what the fraudsters want.
According to the FTC, since 2021, more than 46,000 people have reported losing over $1 billion to crypto scams. Now, the median loss is about $2,600.
The IC3 alone received over 69,000 complaints of cryptocurrency fraud in 2023, with losses totaling over $5.6 billion. As this problem keeps growing, a trader must be extra cautious and well-informed.
Already, investment scams compose almost half of all crypto-related scams today at 46%, which goes to show how important it is to recognize a scam first before you go ahead to invest.
Now, the issue is that these scams not only affect you as an individual but also go a long way to harm the reputation of the whole cryptocurrency market. The more legitimate investors have been driven away, the more scams keep retarding innovation and hinder the development of digital currencies.
Why Are Crypto Scams Increasing?
Various reasons make crypto scams more common:
1. Lack of Oversight: Unlike traditional financial markets, the cryptocurrency space is lightly regulated in such a way that it gives scammers more opportunities for their activities without being noticed.
2. Anonymity: Because blockchain technology enables consumers to make such transactions without showing their true identities, scammers take advantage of this, making it easier for them to disappear with the stolen funds.
3. Volatility of the Market: Generally, cryptocurrencies are known to experience changes in their prices from time to time; this factor places undue pressure on investors.
Scammers now take advantage of this particular source of urgency to encourage people to make poor choices. Thereby making them so gullible.
4. Complex Technology: Most investors have no idea how cryptocurrencies even work, and as such they are easier targets for misinformation or even deceits.
What Are the Common Types of Crypto Scams You Should Watch For?
Knowing the various types of scams is the first step you take toward safety. Here are some of the most common ones you should know;
- Ponzi Schemes
In a Ponzi scheme, scammers promise big returns but pay early investors with the money coming in, from recruits. It’s a cycle that may only survive if more people keep joining. The fact is, the moment a scheme runs out of fresh victims, it automatically collapses, leaving the later investors with nothing.
- Phishing Scams: Scammers looking to phish(scam) for information create a forged identity that does not allow you to give up personal information, such as private keys or passwords. These could be through emails, social media, and fake websites that appear like real ones.
For example; an email from what looks like a trusted exchange, asking you to “verify” your account by clicking on some links.
- Fake Exchanges: Fake exchanges promise traders fantastic deals but in reality, steal deposits from their victims. Such websites are designed to look very real as they give you special offers like a special promotion for trading. However, once you send them your funds, in no time, you will find out that you can’t get the money back.
How Do You Protect Your Investments?
With the rapid growth of cryptocurrency, in the same manner, there are more ways through which scammers try to rob unsuspecting investors of their hard-earned money. Look at some strategies that will keep your crypto assets safe.
- Promises of Guaranteed Returns
Beware of any investment that promises an assured return, or an offer with high profits with little or no risk. Real investments contain a risk. Any person making any offer against that most likely is just trying to steal your money.
- Unsolicited Investment Offers
If you get random emails or messages in your inbox related to crypto investment, that’s enough reason to be suspicious. A scammer often makes unsolicited offers to people to lure people into fraudulent schemes. So, watch out for suspected investment opportunities.
- Using Unregistered Exchanges
Before you make a trade on any cryptocurrency exchange, it should be registered and regulated. Take your time to verify the platform; check for licensing details to read trusted reviews, because unregulated exchanges have been set up with the intention of scamming users.
- High-Pressure Sales Tactics
Scammers usually create a false sense of urgency. They make you hurry up because you will supposedly miss out on a great opportunity. If someone pushes you to invest immediately, then that is an immediate warning sign. Take time to consider what the offer is about before you make informed decisions.
- Lack of Project Transparency
Usually, a legitimate crypto project will be open enough to let you know what kind of team is behind the project, how the technology works, and what the business model is.
Now, in a situation where it’s difficult to find out through publicly available sources who the founders of the project are, or how that project is organized, you need to take caution.
How Scammers Use Social Media and Online Platforms
Social media have become some of the favorite tools that scammers use to reach out to prospective victims. Scammers do everything in their power to gain your confidence and convince you to invest in some scam schemes. Here’s how they operate;
How to Identify a Scammer
1. Fake Profiles: Scammers create fake profiles, mostly stealing profile pictures and biographies. They can decide to follow or interact with other high-profile individuals just in a bid to look more legitimate.
2. Influencer Marketing: Other scam artists invest money in influencer marketing or fabricate endorsements from prominent figures in the crypto world to give their scams a form of being legitimate.
3. Crypto Forums Penetration: A lot of scammers infiltrate forums, either on Reddit, Telegram, or other platforms, where they directly interact with their potential victims and promote their fake projects.
4. Fake Testimonials: To further dupe (scam) prospective marks, the fraudsters create fake testimonials of phantom investors who testify that they earned considerable profits. Several victims reported how they were initially scammed through contacts posing as credible persons offering inside tips or trading signals that turned out to be scams afterward.
How to Safeguard Against Scams on Social Networks
In order not to fall victim to fraudsters via social networks, you should consider the following;
- Profile Check: Make sure whether a certain account is verified and how active it has been over time. Be wary of promotions that seem suspicious, such as unsolicited investment advice, in particular from social media accounts you do not know well.
- Join Reputable Communities: Participate in well-established crypto forums with knowledgeable members and active moderators to help keep the discussions above board. Thus, being careful on social media can help you, up to an extent, reduce the chance of becoming a victim of some scam.
How to Verify the Legitimacy of any Project (NCOG)
If you are seriously thinking of investing in any project coming from NCOG, then you need to do your homework first. Here is a step-by-step guide on how to verify if the project is legitimate.
Step-by-Step Guide to Verify NCOG Projects
1. Research the Team: Research the members of any team working on a project, for example, NCOG. They should openly disclose their identity and be found on platforms such as LinkedIn.
2. Whitepaper Examination: Any serious project will have a whitepaper explaining what it does, its technology, and its roadmap related to NCOG projects.
3. Listing Check: Verify that the project, in this case NCOG, is registered on some financial authority site, like the SEC (Securities and Exchange Commission), or your local equivalent.
4. Community Activity Check: Look into how active the community of NCOG is on either Telegram or Discord. Most of the time, engaging and active communities are an indicator of real interest in the success of this project.
5. Independent Reviews: Look for reviews from reputable third-party sources in the crypto community and go through neutral opinions before deciding on investing in NCOG.
How to Spot Scams and Fake ICOs and Token Sales regarding NCOG
It is particularly the case that the ICOs related to NCOG may be very exposed to fraud. This is how you can identify the potential scams:
Common Tricks Scammers Use;
- Spoofed Websites: Scammers often create convincing websites impersonating legitimate NCOG projects. Always double-check the URL and some signs of authenticity.
- All Hype and No Substance: This would include those projects from NCOG that are all hype but have nothing substantial to say about technology or a use case. If something sounds too good to be true, it probably is, so beware of such.
- Unrealistic Tokens: The models of token distribution should be looked into; if the early investor seems to be in an overly advantageous position alongside the long-term holder in the NCOG initiatives, this is where you should be very suspicious.
- Pressure Tactics: If you are in a situation where you feel hurried to make an investment decision on an ICO sale window for a specific offering, take a step back and reassess your options before proceeding.
How to Determine if an ICO is a Legitimate Offer
To determine the legitimacy of an ICO related to NCOG:
1. Team Members Research: As much as possible, take time to check the identity of the team members through professional networking sites directly linked to NCOG projects. Also, look out for past experiences and verifiable credentials.
2. Check Out the Whitepapers: Look for explicit explanations about token utility in any particular project associated with the NCOG brand. A valid whitepaper should clearly articulate aspirations, technology, and a roadmap for the project.
3. Community Feedback: Engage with the community through forums like Reddit or Telegram; generally, good projects tend to have enthusiastic advocates who will discuss details of any offerings that relate to NCOG.
4. Independent Audits: Any serious project passes security audits via well-known companies. Make sure that such audits have been conducted and reports are publicly available online.
How to Trade Safely
Considering the high rate with which hacks occur to compromise digital assets, crypto wallet safety is a matter of great importance:
Some Important Security Tips You Should Know
- Enable Your Two-Factor Authentication (2FA)
Besides asking for your password, a second form of verification is also sought every time you try to access accounts that are linked to the NCOG initiatives.
- Hardware Wallets
Consider the use of hardware wallets, such as Ledger or Trezor, specifically designed to securely store large amounts of cryptocurrency offline. This reduces exposure risks associated with online wallets related to investments made under NCOG offerings.
- Avoid Public Wi-Fi
Conducting transactions over public networks increases the risk of hacking. When accessing wallets specifically related to investments made under the banner of NCOG, always make sure to do so over secure connections.
- Keep Private Keys Secure
Never share private keys, and do not store them in unsecured locations. Consider using password managers specifically for such sensitive information storage.
- Regular Updates of Software
Ensure that any software used by wallets gets regularly updated; this includes operating system updates in addition to applications related to cryptocurrencies that may have a direct relationship with investments made through NCOG offerings.
- Learn About Phishing Attempts
Educate yourself about some of the general phishing methods so that you can instantly identify suspicious emails or messages that are making efforts to gain unauthorized entry into your accounts.
Steps to Take When You Suspect that a Crypto Scam Has Occurred Involving NCOG
If you think that you are facing an NCOG project-related scam, take the following immediate actions:
What To Do If You Suspect Fraud
1. Report It Immediately: The moment a doubt strikes your mind that this might be fraud involving you take immediate action by reporting it to relevant authorities such as the FTC or IC3.
2. Reach Out to Your Exchange: If you have ever used any exchange for transactions that you suspect are in tandem with the scamming activities that happened lately, inform them immediately so they may be able to assist you properly.
3. Stop Communication: Refrain from communicating any further with suspected scammers; rather, block them on all platforms where interactions have taken place thus far.
4. Document Everything: Record all communications interchanged between you and the suspected parties involved; this documentation will be of great value, perhaps, during the later investigations by law enforcement agencies.
How Not to Get Scammed: Tools and Resources
There are several tools and resources that you could use to help in identifying probable scams and staying secure as you trade. These include:
- Scam Trackers: Websites like scam trackers at the FTC allow one to visualize reported scams and enable reporting of any dubious behavior that one comes across.
- Verified Exchanges: When possible, remain with those exchanges that are well-recognized and in good standing within the crypto community. These websites, more often than not, have been through a rigorous process of vetting or conforming to industry regulations.
- Security Tools: Employ the use of software packages that scan your transactions for suspicious activities. This adds an extra layer of security to funds that would otherwise have to be offline.
- Educational Resources: Draw upon Internet websites supplying information on how to securely trade. Education empowers you to make better decisions in this complicated world of cryptocurrency.
Conclusion
With each passing day, new technology features may prove to help keep malpractices at bay and steer clear of losses on grounds of ignorance or negligence.
It is said by experts that as the regulatory environment keeps on tightening, it will become difficult for fraudsters to sustain their malicious activities.
So, as a trader, you must keep yourself updated on these changes and further develop your security measures.