What is a scammer? How to identify scammers to protect your cryptocurrency assets

If you’ve entered the crypto market, you’ve definitely heard about Scammers – professional fraudsters who target inexperienced investors. What is a scammer? Simply put, they are individuals or organizations engaging in fraudulent activities to steal others’ cryptocurrency assets. As the internet develops, scammers’ methods become increasingly sophisticated, posing a significant threat to the global investor community.

What is a scammer and how they operate in the crypto market

Scammers use clever tricks to gain investors’ trust. Most victims don’t realize they’ve been scammed until they’ve lost their money. Some even know they’re dealing with scammers but still participate in hopes of high returns – this “gambling” mentality is exactly what scammers exploit.

The scale of scammer operations isn’t limited to one country but can spread worldwide, with millions of potential victims. One classic model scammers use is Ponzi schemes – where new investors’ funds are used to pay returns to earlier investors, creating an illusion of real profits. When new investors stop joining or the number of participants becomes too large, the system collapses, and the scammer disappears with everyone’s money.

Common scammer fraud methods

Scammers through fake ICOs

This tactic was popular during the ICO boom in 2017. Scammers launch a new cryptocurrency project with flashy promises, hire KOLs for promotion, and build credibility to raise funds via ICO. After collecting a large amount, scammers abandon the project, steal the funds, and disappear.

Signs of a scammer-created project:

• No clear solution or practical application features
• Anonymous development team, inexperienced, or with a history of scams
• Poorly designed website/whitepaper, unprofessional
• Vague or incomplete roadmap
• Lack of credibility, little concern for the community

Scammers withdrawing liquidity on DEX

On decentralized exchanges like Uniswap, Sushiswap, PancakeSwap, scammers exploit liquidity features to execute their tricks. Initially, the project appears professional and well-organized, but after listing and raising liquidity, scammers withdraw all pool funds, causing investors to lose their entire capital.

Warning signs:

• Low or floating liquidity
• Promising unrealistically high APY returns
• Locking or restricting buy/sell functions
• Scammers hacking their own project to dump large amounts of tokens

Strategies for investors to prevent scams

To avoid falling victim to scammers, investors should perform basic checks:

In-depth project research: Understand the project’s solution, whether it truly needs blockchain technology, how the community is built, and the tokenomics.

Check Smart Contracts: Use online tools to verify contract addresses, identify suspicious holders or founders that could impact the project.

Verify websites: When connecting your wallet to a website, always confirm its legitimacy and safety. One way to protect your assets is to revoke permissions after use, preventing scammers from exploiting access to steal assets.

There are many tools available to help verify projects – from blockchain analysis platforms to fake token detection tools. Regularly using these tools is a good habit to prevent scams.

Conclusion

What is a scammer? They are not just fraudsters but also a major challenge for the crypto investor community. Understanding how scammers operate, recognizing various fraud schemes, and applying preventive measures will help you protect your assets effectively. Always stay alert, do thorough research before investing, and remember: if an opportunity seems too good to be true, it might very well be the work of a scammer. Wishing you safe and successful investing!