Let’s look at four common cryptocurrency scams. The cryptocurrency market is susceptible to common scams. Because many rules are unclear and challenging for regulators to enforce, Cryptocurrencies are prime targets for scammers.
AirDrop
The AirDrop scam is prominent in the decentralized finance field or DeFi.
Tokens are dropped in your digital wallet via AirDrop. In most cases, the drop is a reward for taking certain actions on a platform. Hackers could, for example, airDrop a token that has value into your account. In exchange for a more recognized token, you are letting the hacker have access to all the assets in your wallet.
Rug pull scam
As the name implies, hackers create a token and list it on a decentralized exchange (DEXs), then match it with a leading cryptocurrency. Logically, investors contribute to the project, exchanging currency. Inevitably, when the hacker has made money, they pull the rug from under the investors, driving the coin’s price to zero.
Consequently, investors end up holding a valueless token.
Pump-and-dump
Markets for securities are rife with pump-and-dump schemes. This scam isn’t unique to cryptocurrency, but it is a wide-open opportunity for scammers without the regulation enjoyed by stocks trading.
First, a person or group of investors buy into a low-trading asset when its price is low. Second, they hype the asset through social media. Commonly, the hype is false. Finally, once the asset attracts legitimate investors, the nefarious investors dump those assets at high prices.
Pig butchering scam
Pig butchering commonly begins on online dating sites. Typically, the scammer uploads an attractive profile picture to lure in the “pig,” then slowly begins to “fatten up” the target. Inescapably, the target steadily grows more trusting.
Eventually, the scammer reveals how they made millions in cryptocurrency markets and gets their “pig” to invest. To continue the con, the initial investment pays off. But the payoff is only on paper.
The scammer uses phoney sites to dupe their victim into sending greater and greater sums of money. Under these circumstances, when withdrawals prove impossible, the “pig,” now “fattened up” is steered to its slaughter.
We commonly know this as the romance scam. We believe that this cruel crypto rort originated in China.
