Criminals are constantly trying to come up with new ways to lure cryptocurrency from owners. Among the most common are the following: Pump & Dump schemes, scam ICOs, pyramid schemes and Ponzi schemes. We tell you how these schemes work using real-life examples.
Criminals are constantly trying to come up with new ways to lure cryptocurrency from owners. Among the most common are the following: Pump & Dump schemes, scam ICOs, pyramid schemes and Ponzi schemes. We tell you how these schemes work using real-life examples.
The head of the specialized unit of the Cyber Police, Oleksandr Ulyanenkov, spoke about the most popular fraudulent schemes involving cryptocurrency in an interview with Ukrainian News.
Scam ICOs (initial coin offerings) are fake fundraising campaigns for supposedly promising crypto projects. People are offered to invest at an early stage in order to receive super profits later, and then the organizers simply disappear with the money.
Phishing attacks are very common, when scammers create fake crypto exchange websites or send emails with supposedly official requests to enter their data. As soon as the user enters their username and password, their account ends up in the hands of attackers.
As one example of Scam-ICO: three young men from Kyiv organized a fraudulent scheme under the guise of investing in cryptocurrency and defrauded almost 100 people .
Or an example of phishing: a person wanted to buy cryptocurrency on Binance, but lost $32,000 .
People are promised high profits, but in reality they get their money at the expense of new investors. As soon as the flow of investors slows down, the scheme collapses, and most participants are left without funds.
Fake airdrops and sweepstakes are also common. People are offered «free crypto» in exchange for a small contribution, but of course, there’s no way to get anything in return.
This is how a pyramid scheme works. For example, in the US, a couple organized a $6 million pyramid scheme with digital assets from investors of «God’s Blessings Through Cryptocurrency.»
This is a scheme where a group of scammers or influencers artificially inflates the value of a little-known cryptocurrency, luring new investors in. When the price rises, the organizers sell their assets, leaving everyone else with devalued tokens.
Today, artificial intelligence is actively used to create deepfakes with famous people who supposedly support crypto projects. The more realistic the fraudulent content looks, the more people fall into the trap.
How the Pump & Dump scheme works can be seen in the story of Pastor Trump, who launched his own meme coin a few hours after delivering his blessing at the presidential inauguration. A day later, the coin’s value fell by almost 100%.
