Why Do These Crypto Scams Work?


Welcome to the latest issue of CapitalRollup Digest! Today’s digest is for May 17th, so it should take you about 5:00 minutes. We’ll get right to it.

  • What does the Market Look like today? (Top 5/10 popular Indexes)
Index Price Market Update

Why Do These Crypto Scams Work?

We can all agree that scammers go where the money is, and right now, crypto is where the money is.

In 2021, fraudsters stole $14 billion of crypto, according to blockchain data firm Chainalysis. With crypto growing, scammers are always trying to swindle you.

Although there are a lot of resources out there to teach people how to avoid scams, many crypto investors still get swindled, losing their money and wealth in the process.

Today, we’ll look at some crypto scams you should avoid and how to spot them.

  • Fake websites

The most common scam in crypto is fake websites. Scammers create fake, but very similar versions of the popular and most used DApps, tools, and official sites, and trick people into interacting with them with their wallets.

These sites often look very similar to legitimate sites, making it difficult to tell the difference. Whenever you use these websites or try to do any sort of action on them with your crypto wallet, they drain everything in it.

  • Pump and dump schemes

Pump and dump schemes are quite popular and can happen in minutes or even take days. They usually involve creating a token and recruiting influencers to hype it continuously.

Investors see this shiny token with rising price action and they want to buy into it, which allows scammers to quickly dump on them and earn millions of dollars in most cases.

Scams of this type usually happen during bull markets and can take minutes or even days to play out.

Bottom Line

Always keep this investment caveat in mind: “If it’s too good to be true, it probably is.”

  • Fraudulent initial coin offerings (ICOs)

Another common scam is through ICOs.

Here, scammers pretend to be crypto companies building products that are useful. They ask people to invest by sending them highly valued cryptocurrencies like Bitcoin and Ethereum in the early stages to get a discount on their tokens.

After raising more than enough, these scammers shut down everything about the project they claim to be building and flee with the money they raise.

  • Fake/Scam NFT mints

One crypto scam format common in the NFT space is fake mints. With the continuous rise of NFTs, many scammers are also seizing this opportunity to steal from investors and cart away millions in crypto assets.

To do this, they will set up legitimate projects and offer many things in their project roadmap to entice many interested people. They usually carry out their scams on the day of the mint by either using links that can drain people’s wallets or just discontinue the project after raising huge amounts from investors.

So how can you keep yourself from these scams?

  • The first rule of crypto security is always to use a “Burner wallet” when clicking on links or interacting with unfamiliar sites.

A burner wallet is usually one where you have little to no valuable assets stored.

Burner wallets make it easier to interact with scam links, sites, and decentralized applications (DApps) with little to no risk.

  • Always DYOR.

Beyond finding gems and investing in crypto assets, doing your own research is equally as important in order to avoid scams. Before clicking any link or participating in any project, go ahead and find out more about this link

If you want to use a decentralized product, go to their social media profiles to see their original links, and if someone shares a link with you, ask questions before clicking on it.

One thing about scams in crypto is that they rarely appear as scams until you lose your money.

  • Only invest in things you understand:

If it’s not clear to you how a particular cryptocurrency or NFT project works, even after doing your research, it is okay to not invest in it. Chasing everything could lead to losing everything.

As crypto adoption and investment continues to grow, so will scams and scammers. Protect yourself and your assets.

•Trivia 🤔

Which one is a common Crypto scam?

A. P2P

B. Mining

C. Minting

D. Phishing

Find the answer in the next issue of CapitalRollup Digest 😉

Answer to yesterday’s trivia was C.) A set of private keys

Crypto Word Of the Day!


Pump and Dump scheme

Means: Is a scheme that attempts to boost the price of a stock through recommendations based on false, misleading, or greatly exaggerated statements.

The term used in a sentence:-
As other investors bought, he sold, in a classic pump and dump scheme, Securities and Exchange Commission officials said.

Community Update 📢

We will be organizing a Twitter Space session soon with 5 industry leaders where we will discuss the crypto markets and everything on web3. You can look forward to it😎

•What We Are Reading Today 📰

Cryptocurrency scams: tips to avoid being a victim. Read more

Number of Crypto Scams increasing drastically. Read more

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