All methods of making money through investments are actually very boring and tedious; it’s simply about finding a safe and reliable trading platform, identifying a trading strategy that suits you, continuously adjusting and refining that strategy until you can achieve stable profits, and then buying-selling-buying-selling... repeating this process.
There is a saying in the investment circle: Do you want to earn money in a boring way or lose money in an exciting way? Typically, many exciting stories involve losing money because they are likely designed and packaged by scam groups.
The biggest feature of cryptocurrency is decentralization; it does not rely on any centralized platforms or regulatory intermediaries. All data is publicly available on the blockchain and is difficult to tamper with. However, this advantage is also a disadvantage because on-chain activities cannot be regulated. For novice users in the crypto space, due to lack of understanding, knowledge, and experience, they are very likely to become targets for scam groups.
This article introduces the four most common cryptocurrency scam traps and provides four tips for newcomers in the crypto space on how to avoid cryptocurrency scams and ensure the safety of their funds.
Common scams in the crypto space
1) Fake exchanges, counterfeit websites
WEEX often receives reports from users claiming they have been scammed by fake WEEX trading platforms. As a result, WEEX has issued multiple fraud risk warnings and created a page dedicated to counterfeit scam websites, listing over 40 phishing scam sites impersonating WEEX exchanges, but new counterfeit platforms continue to emerge, and users keep getting scammed.
When choosing a trading platform, you can search through authoritative third-party information websites like CMC, Coingecko, and Feixiaohao. If the exchange you encounter is not listed on these websites, or is listed but ranks very low with incomplete information, it indicates that its trading volume is very limited and it is likely a fake exchange.
The scam tactics of fake exchanges are similar to traditional romance scams. They will add you as a friend through Telegram, Line, WeChat, Discord, and other communities, first establishing initial trust through small talk, then "casually" revealing some investment information or a "wealth code," and showing off their profit screenshots to entice you to register and deposit. But these are often schemes where you can only deposit money but cannot withdraw it.
Especially if a trading exchange's website or app has a particularly simple UI design and uses WeChat, Telegram, or Line as official customer service communication methods, you should be especially cautious. This is because generally, well-known exchanges have a very large user base, and using instant messaging tools like Telegram for communication would be overwhelming; they can only choose professional customer service systems like Zendesk or use Email for communication.
Some scam platforms initially allow you to withdraw funds, letting you earn a little money to taste the sweetness, but when you transfer more funds, they will drain you all at once. This is called "fattening the pig before slaughtering it."
If, when you attempt to withdraw funds, the other party presents various strange reasons to stop you, you should be even more cautious. At this point, you should acknowledge that you have entered a fake exchange, and consider the funds you previously deposited as tuition fees. Do not harbor any hopes that meeting the other party's demands will lead to a successful withdrawal. Think about it: would a wolf let go of its prey?
For scams involving fake exchanges, you should not hold any illusions from the start, because any exchange is merely a trading platform. No exchange can help you make money; only your own investment insight and trading strategy can do that.
2) Airdrop scams
Airdrops are the most commonly used marketing tool in the early stages of a project, mainly aimed at attracting users to join, increasing project popularity, and community awareness to draw more users to understand and use the project’s tokens.
Typically, airdrops require users to connect their wallets to claim. However, scam groups often guide you to install a fake wallet and make you transfer funds into it. Some scam techniques involve creating a fake airdrop claiming website for a well-known project and then notifying you through Telegram or private messages to claim a certain token's airdrop. When you connect your wallet to claim, you inadvertently authorize the other party, who would then withdraw all the funds from your wallet.
Share a personal experience of a friend around you. My friend is a senior player with extensive on-chain operation experience, usually very cautious and does not randomly click on suspicious links. However, recently his wallet was completely emptied, and over 6 million yuan that he had painstakingly accumulated over the years in the crypto space was stolen. It turns out that he had clicked on some unknown links about 6 or 7 years ago, which led to his wallet being authorized to a scam group. At that time, he was still a newbie in the crypto space, had a weak risk prevention awareness, and since there were no assets in the wallet at that time, he didn't pay much attention. But in the last two years, he has been more active in on-chain activities, playing with inscriptions and chasing after meme coins, and he believed that the wallet's security measures were adequate, so he moved most of his assets to a hot wallet. Moreover, for convenience, he did not register a new wallet or separate his assets into different wallets, which led to today's tragedy.
Therefore, it is recommended that friends who play on-chain should register several wallets, keep funds stored separately, and when claiming airdrops or engaging in meme coin activities, use new wallets with only a small amount of funds for gas fees, rather than risking their main wallet for the sake of saving a few U in transfer costs.
Additionally, you can use some tools to check wallet authorizations to investigate whether your wallet has risky authorizations and cancel any that are infrequently used or untrusted.
3) Project team Rug Pull
Rug Pull generally refers to a project party suddenly abandoning the project and running away with investors' money.
A well-known case of a Rug Pull scam is the Squid Game token SQUID. As the (Squid Game) series became a hit, the gaming platform Squid Game launched a game of the same name and issued the SQUID token, which players needed to hold to participate in the game. SQUID surged over 700 times in just three days after launch. However, due to the project being hacked, the project team simply abandoned it, suspected of running away with the funds, causing the token price to crash to zero instantly.
4) OTC cryptocurrency purchase scams
The most common scenario is that when we usually buy and sell U with fiat, we often encounter situations where we transfer money but do not receive U, or transfer U but do not receive money, and we might even end up buying fake U. Therefore, it is recommended that when buying and selling U, always use the OTC market of well-known exchanges, as the platform will conduct preliminary audits to filter out suspicious U traders. At the same time, the exchange acts as a third-party intermediary, confirming that one party has received the payment before releasing the currency to the other party.
Additionally, OTC trading has a risk of potentially receiving illegal funds from the other party, which may lead to the freezing of your bank card. Therefore, many U traders now require buyers to provide recent bank statements before trading. We ordinary investors, due to lack of experience, cannot determine whether the other party's funds are clean and compliant when selling U. The suggestion here is to choose OTC platforms with a relatively high reputation and a large number of historical transactions, and to conduct small transactions in batches. At the same time, try to use an empty card that has no money in the account to receive money, and withdraw it immediately or transfer it to another bank card. Never be tempted to choose traders offering low exchange rates to buy U, or choose traders with high exchange rates to sell U. Remember, "abnormal events must have something unusual behind them."
How to avoid cryptocurrency scams?
The above are the four most common cryptocurrency scam methods; how should we prevent them?
1) Do not blindly follow trends; do not invest in things you do not understand. Buffett said, you can never earn money beyond your knowledge. Therefore, it is essential to learn more, understand cryptocurrency knowledge, and improve your awareness.
2) Keep funds stored separately in different wallets; only store a small amount of funds as gas fees in wallets frequently used for on-chain interactions. Remember, there is no free lunch in the world; even free airdrops require you to complete tasks or interactions to earn points. No project will give you airdrops for no reason, so do not easily believe any private messages telling you to claim airdrops.
3) Choose trustworthy exchanges. No matter how high your investment level is, how low your fees are, or how accurate your investment choices are, once your money is placed in the wrong place, you will end up losing everything. Therefore, it is very important to filter exchanges before deciding to deposit funds for trading. For this, you can refer to the article (How to judge the security of a virtual currency exchange: Four major standards to avoid scams).
4) It’s better to miss out than to make a mistake. If you feel that a project or platform is suspicious, no matter how fantastical their claims are, do not rashly participate. Investment opportunities in the crypto space arise every day; missing out may only mean earning a little less profit, but if you fall into a scam project or platform, you could lose your entire principal!