How scams occur in cryptocurrency

How scams occur in cryptocurrency

The market of cryptocurrency is not scam proof. Millions of investors have lost their money due to several types of fraud. In the year 2018, the total amount of loss due to crypto-related crimes was around the US 1.7 billion dollars. The criminals used both old and new types of tactics to hack and loot funds using different means. Crypto coins schemers mostly rely on various tried and tested Ponzi schemes where they bag in new investors to pay the initial investors.


These fraudsters also use automated processes to conduct their plans. Especially, the use of Telegram has become very popular because it offers instant messaging systems using bots. And it is highly recognised among crypto enthusiasts. There have been cases where the crypto coins were legitimate, but the scammers found a way to manipulate and loot funds from these digital coins. So the question is how these criminals rope in investors in their schemes.

Steamrolling swindlers

Some crypto criminals use people’s greed to manipulate them. For example, an unknown group of people handles a scam bot named iCenter, and it has been proven as a Ponzi scheme for Bitcoin and Litecoin. This group of people offers 1.2% daily returns on investments but do not disclose the business strategy they use.  


They use Telegram to connect with the investors baiting them with huge returns against their investments. A group of scammers distribute a referral code through blogs, social media and as such. Once they become successful roping in some new people, they provide them with encouraging messages and offers. Later on, they are given a separate bitcoin wallet in which they can invest their bitcoin, and there is a 99 to 120 day waiting period. 


During the waiting period, these new people try to attract more people by sharing their own referral codes using social media. So the number of people is increasing day by day. But there is no actual investment in any legitimate business. Instead, the people who attract more investors get a percentage of funds. And the cycle continues bringing more people, whereas the early investors get the money from the existing accumulated funds.

The investment based upon lies

Some crypto criminals loot investors through more straightforward methods. For example, the creators of the scam cryptocurrency OneCoin were able to bag US 3.8 billion dollars by convincing investors that their hypothetical cryptocurrency was real. Some fraudsters have also claimed that they stole money through arbitration, i.e. buying cheap and selling at a huge profit taking all the investor’s money in the process. 


The blockchain technology is still in its growth period, and people are exploiting human behaviour towards money to steal money by making fake promises. And once a scam takes place, it remains there, at least for some time. Therefore before making an investment, it would be a wise decision to research and look for authentic background information before directly investing and end up losing a lot of money in the process.


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