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How to Identify a Cryptocurrency Con Game

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How to Identify a Cryptocurrency Con Game

Cryptocurrency has taken the world by a storm revolutionising financial institutions and payment systems. However, Cryptocurrencies have also become the target of fraudulent characters who target crypto users. There are different ways these fraudsters dupe crypto users of their money. It is, however, imperative that you know what these scams are and protect yourself from them

Signs You are about to Fall for a Heist

There are telltale signs that you are about to be the victim of a crypto scam. You can identify these signs by looking out for the following;

  • Is the website secure? You have to ensure that any crypto website you log into particularly for payment has an address that starts with “https” instead of “HTTP”. If this is not the case then the website is not secure and any data you send to the website will be compromised. 
  • Sometimes, scammers duplicate a website or crypto product and you might be on a scam website. You have to ensure that the website’s URL is free from spelling and grammatical errors as this can be a sign that it is a scam.
  • What does the website say? Most often scam websites do not have an “About us” page and details about the people behind the company can be shady. For instance, when you check for the names of the company’s founder, you might not find him anywhere on the internet or find out he is associated with shady dealings. That is a sign that you shouldn’t invest in whatever the product is about. Legitimate cryptocurrency projects are usually transparent about their founders, investors and people involved in the project

Sometimes scammers take the time to ensure they cover their tracks properly. Times like these, you just have to trust your instincts and check out for any red flags.

Crypto Pitfalls to Avoid

Now that you know how to check for cryptocurrency scam alerts, you need to know the common crypto scams and how to avoid them.

Ponzi, pyramid and MLM Schemes

A Ponzi scheme promises investors huge returns. But the truth is that Ponzi schemes pay older investors from the investment of newer instors. It is a typical example of robbing Peter to pay Paul. So long as there are new investors a Ponzi scheme will pay its investors. Convinced that the scheme is legit, investors who have received their payouts will convince newel investors in. These investors will pump in their money into the scheme and sooner or later, the scheme collapses and the founder is nowhere to be found.  

On the other hand, multilevel marketing (MLM) schemes claim to sell a product but to earn from the scheme you have to bring in more people. You earn from your downlines. So you might end up advertising a product to your family and friends who might earn nothing from the so-called product.

To save yourself from falling into the hands of fraudsters, always ensure that you avoid schemes that promise outrageous returns. Also, be on the lookout for cryptocurrency projects that promise to give you profits for introducing new investors to enjoy bigger profits.

Fake Wallets and Exchanges

So many exchanges exists and a newbie in the cryptosphere can easily fall prey to fake exchanges and wallets. These exchanges bear all the markings of a real and legitimate exchange but they are out to cause harm to unsuspecting users. Most of these exchanges have even been found on Google play store making them look like legitimate apps.  A typical example is Poloniex which had duplicated apps hoping to swindle unsuspecting users. They almost succeeded as they had gotten 5,500 downloads before it was flagged down by Google.

Once you download these fake exchanges and wallets, they can steal important account details or restrain you from retrieving your money. To be on the safe side, read reviews about wallets and exchanges before downloading them. Also, do not download random crypto apps from Google Play. Ensure that the apps are well known, trusted and have real people behind them and not shady characters.

Phishing
A more familiar scam is Phishing.  Scammers send you unsolicited emails that look like they were sent from you bank and a click will take you to a site that once you input your account details they can log into your real account and cause devastating damages. To avoid phishing scams, you have to ensure to double check URLs before proceeding to click the link. Protect your private key and never disclose it not even to someone who claims to be from the exchange.

While this is not a full checklist of crypto-related scams they are very common. You have to ensure that you protect your self from falling a victim. A lot of persons have fallen prey to scam crypto projects. In April 2018, more than 300,000 investors lost a total of $660 million to an MLM scam called Pincoin and iFan ICOs. Equally, in January 2018 Bitconnectwas criticised for being a Ponzi scheme and promising investors 40% returns.

Do you know anyone who has fallen victim to a crypto scam? Have you noticed any suspicious crypto product? Share your opinion with us in the comment section below.

Image credit: Pixabay

Disclaimer:
The Information provided on the website is designed to provide helpful information regarding cryptocurrency subjects. The content is not meant to be used, nor should it be used as a basis, foundational knowledge or prerequisite for decision making regards trading. Always do your own research and due diligence before placing a trade. We are not liable for any outcome based on any content found on the site.

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Bitcoin News

Trump Expresses his opinion on Crypto, Libra; Binance to burn $2.4 billion worth of BNB

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Trump via a tweet has posted hours ago expressed his opinion on cryptocurrency clearly defferentiating Bitcoin and other Cryptocurrency as well as on Libra the Facebook Global Cryptocurrency which it unveiled in June 2019 and to commence operations in January 2020.

According to Trump, he is not a Fan of Bitcoin and other cryptocurrencies which he describe as not money and highly volatile and basede on thin air. He went further to say unregulated Crypto Assets can facilitate unlawful behavior, including, drug trade and other illegal activities.

On Libra, the 45th President of the free world openly said Libra will have little standing and Facebook and other firms want to be come a bank they should and must seek a banking charter and be subject to all banking regulations both nationally and internationally.

As a true President and the first man in the country, he declared the US Dollars as the only currency in the USA and that it is stronger than ever, dependable and by far the most dominant currency worldwide.

As usual, the crypto enthusiast on Twitter had their own opinion to comment on the post by POTUS.

In another news, top exchange Binance has announced after burning their quarterly alloted BNB tokens that they will burn their Team allocated Binance Coin BNB which is a total of 80BNB currently worth $2.4 billion.

During one of the first IEOs on the Exchange, investors were unable to participate thus a public outcry with Binance coming to the rescue by instituting a Lottery system which saw users holding a certain number of BNB before being able to participate in IEOs on the exchange. This cause a rise in the value of the BNB.

This move by Binance amongst others will see Binance Coin hitting astronomical height in the next few months to years. We can’t wait to see what the chats will say in few five years time.

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Poloniex now allows Users from Over 60+ Countries to Buy Cryptocurrency with Debit/Credit Cards and Withdraw to Bank Accounts

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In a tweet, the US based cryptocurrency exchange Poloniex announced that Users of the cryptocurrency exchange can now purchase bitcoin using their debit and credit cards. The exchange also supports deposits withdrawals of cryptocurrency into local bank accounts in over 80 countries.

Purchasing cryptocurrency has been a daunting task for a long time for many who desire to purchase cryptocurrency easily and withdrawal of same to their local currency for easy spending have been seeing difficulties however, other exchanges have tried making this easier by offering their users the ability to buy crypto with their cards. Poloniex enters this category of exchanges with this move.

According to Poloniex, customers of the exchange can withdraw the USDC stable coin into their bank accounts as well as send fiat into their Poloniex and have it automatically converted into tokenized USDC for trading.

In making the purchase of Bitcoin with their credit and debit cards, Poloniex has partnered with Payment Processor Simplex to allow the users of the exchange to quickly and easily get in on cryptocurrency at a moment’s notice. The disadvantage however is the charges which stands at a greater of 3.5% or $10 transaction fee which Simplex charges. This will affect those in developing countries whose currency is very much low in value compared to the dollar or users with lower financial capabilities. Buying more bitcoin would be better.

The exchange pegs deposits at a weekly limit of $50,000 and withdrawals at $25,000 however, it signified this can be increased for specific customer’s need as typical with exchanges in this Fiat-to-Crypto category.

Poloniex launched in January 2014 is based in the US and it offers cryptocurrency exchange services, margin trading, lending according to its’ website. It allows users to exchange cryptocurrency against five trading pairs such as BTC, USDC, ETH, XMR and USDT. The exchange was acquired by Circle for $400 million in February 2018. Currently at an average of $55 million daily trading volume and ranked 59 in coinmarketcap.

 

The move to allow easy purchase of crypto and withdrawal of same to local bank accounts will definitely cause a boost in its trading activities.

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Binance Updates Deposit and Withdrawal Policy for BTC and ETH Block Confirmation Time

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Binance in a blog post on its blog announced the reduction of block confirmation time for the deposit and withdrawal of the two largest cryptocurrencies by market capitalization Bitcoin and Ethereum. This reduction enables users of the exchange to deposit and withdraw Bitcoin and Ethereum twice as fast as it was prior to this new policy update.

According to the blog post, deposits for Bitcoin BTC is now reduced from 2 block confirmation to 1 block confirmation while withdrawals stands at 2 block confirmations. For Ethereum the second largest blockchain network by market capitalization and the first smart contract platform with its native coin the ETHER denoted by ETH, deposits and withdrawals can now be processed on 12 block confirmations. This is a 60% reduction. As all ERC-20 tokens are based on the Ethereum blockchain, this changes also affects them.

Binance is one of the largest cryptocurrency exchange led by its marverick CEO popularly known as CZ.  The exchange few months ago was victim of a cyber attack where it lost about $40 million dollars in Bitcoin however, the CEO was quick to point out that the user’s funds were covered in the #SAFU provision made by the exchange in case of such situations. A first of its kind product from an exchange. As a leader in the cryptocurrency exchange business, Binance has continues to offer innovative products recently being the innovation of Initial Exchange Offering which is a modification of the Initial Coin Offering.

A move which saw other exchanges copying and replicating albeit with some not having as great a result as Binance. The exchange is still into Charity, helping lives and transforming homes. Though it has been hit by cyber attack, reaction to its policy of using Tickets in its IEO (a measure to ensure everyone gets involved after a call out over a previous IEO few people could only participate), a move which saw people saying the exchange supports only those with big pockets, the exchange has continued to grow with its native token the BNB seeing incredible growth over the bear season till now as it now stands at $33.

Providing clarification on the block confirmation update, Binance said it was “to provide a better service for our users, Binance has made the following adjustments to the number of blocks confirmation required for user deposits & withdrawals”.

In conclusion of the blog post, the exchange informed they will continue to listen to the community’s feedback and improve their service offerings.

We can only assume better quality and innovative products are on the way as the exchange celebrating its 2nd annniversary has been binding the word of blockchain and finance since inception.

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Altcoin News

Bitfinex’s LEO Smart Contract Unusual Code: An Intentional Move to Defraud?

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A software “Bug” was discovered recently in the Bitfinex Smart Contract for its LEO token. The bug grants any holder of the LEO token unusual levels of administrative privilegdes. Such priviledges are entirely unusual, though errors in smart contracts has been seen before, this is the first time these types of concerns has been raised concerning smart contracts codes.

Softwares are always with bugs. No matter how much care is put into writing the codes and rechecking, codes are written by humans who unintentionally make mistake. Mistakes which could cause untold damages financially and in other areas of life. In financial applications or softwares, one tiny vulnerability could allow bad actors to take undue advantages of systems and do what they are good for. Damage.

The Bitfinex ERC-20 smart contract code contains permission to enable owners of the Token to mint unlimited new tokens, they also have to ability to delete tokens of other people both in their personal wallets irrespective of the type of wallet. LEO owners are empowered via the vulnerability in the Bitfinex smart contract code to delete anyone’s coins both in centralized and decentralized exchanges.

Bitfinex, one of the world top cryptocurrency exchange was in the news some months ago and for a long time now owing to its shady behaviours as an exchange and also by its relationship to the stable coin Tether (USDT). Owing to financial challenges it was having since its funds were frozen, the embattled cryptocurrency exchange decided to host an Initial Exchange Offering were it aimed at raising xx billion dollars. A move which saw some reactions, however, the exchange later announced it has raised sufficient funds via other means and thus there will be no public sales of the LEO tokens.

In a tweet by the CTO of Bitfinex and Tether Paolo Ardoino, which was a reply to the call out made on the Bitfinex exchange, it appears this “bug” wasn’t in fact one rather it was coded into the contract with Paolo saying “For security and future reasons we left the ability to upgrade the Token Contract. That’s really a key feature for a contract that might live lot of years. Minting more tokens would not just make sense for Finex…like shooting our foot.”

In reaction to this, some twitter users were expressing their opinion on the issue.

https://twitter.com/will_harborne/status/1146507539170897920

 

With its reputation in times past, the Bitfinex exchange has a whole lot to contend with at this time however, this revelation presents an important reminder to everyone in cryptospace to not just Trust but Verify.

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