Classic scams on the cryptocurrency market that investors need to beware of

Recently, we have often come across scams and stealing user data from press information. Users can fall for a cryptocurrency scam and not even know it. Scammers are becoming more and more sophisticated and have stolen even billions of dollars from victims. So what is the cause, and how to avoid it? In the latest video, Coin Bureau, a popular YouTube channel focusing on cryptocurrencies, has compiled the 6 most common scams that investors need to avoid in 2022.

One of the most popular scams right now is the giveaway, which pervades nearly every corner of the internet.

Giveaway is a scam in which cryptocurrency is given out for free, provided that the user sends a small amount of cryptocurrency to someone else, and they send back double, triple, or 10 times that investment.

This is not a new form of scam in the market. Usually, users will be asked to visit some link that leads to a website detailing the giveaway steps. Here, the scammers will try to convince the users that people are actually getting commensurate returns.

Most of these scams usually take place on Twitter, Youtube, Discord, and Instagram, with time limits to make users make quick decisions without consideration. In the case of Youtube scams, they are usually simple live streams where a celebrity or group of people joins the conversation.

Scammers often attack high-following Youtube channels, gain access and delete their content, and then broadcast information about the scam project directly. The best way to avoid scams of this kind is for users to understand that no one on the Internet is going to give them something completely free.

Rug pull

Rug pull is a fairly common scam in the NFT and DeFi space. In the case of NFTs, creators will often get someone to create beautiful images, release them on short notice, promise an interesting roadmap, or pay some influencers to promote them. project. After the minting is done and everyone has NFT, the project creators delete all websites, social networks, and media, then run away with all investors’ funds and leave them.

Carpet pulling doesn’t have to happen overnight. There are cases where the project developer slowly distances himself from the project over the course of several weeks or months. Their goal is for buyers to lose interest and give up hope for growth. Slow carpet pulling is more common and can be more difficult to localize, as users cannot be 100% certain that a project is a scam.

As a result, users need to be more discerning about the types of NFTs they purchase or the NFT mints they participate in. Carpet pulling is also happening in the DeFi space. Unlike ICOs or NFTs, instead of sending funds to the protocol, investors must provide liquidity to the protocol. This liquidity is often used in a decentralized exchange, and investors can get quite attractive profits from the liquidity provision.

During this time, the creators will promote the project to attract demand and liquidity in the pool. This is done using the same paid methods as NFT carpet pulling. As more and more investors buy cryptocurrency, scammers will gradually exchange it for stablecoins and ETH. The liquidity of these projects can reach tens of millions or even hundreds of millions of USD. This is when the developers attack and withdraw all the liquidity from the pool, causing the investors to lose heavily.

Developers can do this because they have no liquidity restrictions in the pool. They still control the smart contracts and therefore have complete discretion over the amount in the pool.

To avoid falling for carpet-pulling projects, users must ensure that they are not locking their coins in some random protocol while also ensuring that smart contract managers still have no control over it to avoid them withdrawing all liquidity.

Phishing attack

Phishing attacks often target users directly through their crypto wallets. One of the worst things is that an attacker can successfully steal a private key by breaking into a user’s device, or tricking them into giving their key to them voluntarily.

There are two types of spoofing attacks, the most common being hackers tricking investors into handing over their seed words. An attacker can ask the user to visit a certain website and enter a seed phrase in order to continue the transaction.

Another method is that the attacker will provide the user with a seed phrase. Through the fake link, the user will use this seed to set up a new wallet under the control of the scammer without even knowing it. The moment they deposit the money in the wallet, the scammer will have the right to withdraw the money.

To avoid phishing attacks, investors must be careful when granting access to dApps before signing any transactions. It should also be verified that the user is visiting the official dApp website and has not approved past “suspicious” smart contracts. Users can easily check this through the tools on Etherscan.


This is when a scammer tries to impersonate others, especially famous and influential people. There are thousands of impostors trying to defraud celebrity followers.

These scams can be quite successful because they take advantage of other people’s reputations for their own gain, and they appear everywhere on nearly every social media platform.

Anyone in the crypto space or with a large following becomes a target for impostors.


Ponzi is a system that maintains payouts by taking money from new investors. It has existed in the traditional financial system for more than a century and has sometimes resulted in losses for the investors involved. These Ponzi schemes have attracted a lot of investors in the crypto space, and thousands have lost or lost their assets over the years.

People tend to believe that cloud mining plans or daily money trading bots tend to pay fairly reliable profits. However, the more reliable the daily profit stream, the more likely it is to attract more investors, and that’s all the Ponzi needs.

Ponzi schemes often encourage users to refer friends and family to join for additional rewards. These are called multi-level marketing plans or MLMs. However, with the advent of DeFi, the line between a Ponzi scheme and a legitimate lending protocol has become increasingly blurred.

To avoid falling into the trap of Ponzi schemes, it is necessary to be 100% sure that users know exactly how the project or protocol generates profits. Some of the major Ponzi schemes often have extremely confusing investment arguments. In these cases, investors need to find a safe way out.

Pump & dump

Project insiders or other market participants often try to pump the token, increasing its value in order to attract attention and get more people to enter the market. When this happens, those who bought it before will dump the token, causing its price to plummet. It is a form of manipulation sometimes used in the stock market.

These pump & dump is usually scheduled to happen on a specific day, at a specific time. Participants will try to collaborate with each other through Telegram and other social networking platforms. This action is considered illegal, and users should stay away from these groups.

How to detect pump & dump actions?

First, pumps tend to occur in low-cap altcoins. They are usually easier to move, as only a small amount of buying pressure is enough to push the price up.

Second, users need to consider listings on exchanges, especially small, shady exchanges, because it is likely that the project will pump easily. Furthermore, the participants are less worried about being “revealed” as there is no need to complete KYC.

Third, pump & dump is likely for the “anonymous” token, and it is impossible to find the exact reason why this is happening.

Besides, if the token has been in the doldrums for months, but trading volume starts to gradually increase within a few days, then this could be a clear sign of an accumulation. Plan operators will have to purchase these tokens prior to deployment, and these waves of accumulation are what users need to watch out for. So, if you see a certain token move and meet all of the above characteristics, don’t FOMO unless you want to lose everything.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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