How to Protect Your $SWEAT: Identifying and Avoiding Crypto Scams
Crypto’s buzzing with a new bull run, bringing both thrills and risks. Hacken’s latest Web3 report sheds light on how scammers bagged over $75M, mainly through phishing and rug pulls in Q3 alone. These cons prey on your FOMO, so stay sharp and look for those warning signs to keep your $SWEAT safe.
Crypto Scams & How To Spot Them
The crypto landscape presents a few key threats to watch out for. Hackers and phishing scams use complex methods to break into systems and deceive you. Rug pulls, where developers suddenly pull out, leaving you high and dry, are on the rise. And don’t forget about human errors — those simple slip-ups by yourself or others that can lead to significant losses.
Let’s take a look at the most common scams.
1. Rug Pulls
What They Are: A rug pull is a type of exit scam where crypto developers abandon a project and run away with investors’ funds.
Spotting Them: Rug pulls follow a typical pattern of token creation, aggressive marketing, and sudden abandonment, leaving investors with worthless assets. When investing in other projects, look for red flags such as lack of transparency, anonymous teams, and the absence of a third-party audit.
Avoiding Them: Get this: out of 78 rug pulls Hacken looked at, only 12 had any audit done. Always check for an independent audit, read the audit report carefully, and be cautious with projects lacking clear information about their team and development roadmap.
2. Phishing Scams
What They Are: These scams involve tricking individuals into giving away sensitive information like private keys or wallet passwords.
Spotting Them: Be wary of messages that sound too good to be true or have outdated designs, especially those that ask for private information or direct you to suspicious websites. Get the latest news from the Sweat Economy team directly on the official Twitter, Discord, Telegram, and Reddit.
Avoiding Them: Never share your private keys or passwords, double-check URLs, install VPN, and use burner addresses for added security.
3. Pump and Dump Schemes
What They Are: In these schemes, the price of a crypto asset is artificially inflated through misleading or false statements, followed by a sell-off by the scammers.
Spotting Them: Be cautious of coins that have sudden, unexplained surges in price and volume with low community involvement.
Avoiding Them: Research thoroughly before investing; don’t base your decisions on social media hype or sudden price jumps.
Be wary of influencer promotions. Influencers often use phrases like “diamond hands” to encourage holding onto assets. However, this can be a tactic to use followers as exit liquidity, leaving them “holding the bag” during volatile periods. So BE skeptical of investment advice from influencers. Always do your independent research rather than relying solely on social media personalities.
Avoid hype-driven investments. Crypto assets that are hyped up on social media can often lead to inflated prices that don’t reflect the asset’s true value. Steer clear of investing based on hype. Look for assets with solid fundamentals and long-term viability.
4. Social Engineering Attacks
What They Are: These are sophisticated attacks that manipulate users into performing actions like transferring funds or revealing sensitive information.
Spotting Them: Be cautious of unusual requests, especially involving money transfers or sensitive information. Always check the authenticity of the email sender and keep access to your Sweat Wallet backup code email with your activation code.
Avoiding Them: Always verify the identity of the person or entity you’re communicating with, and never share personal information or funds based on unverified requests.
Must-Have Security Measures
Strategies to avoid most crypto scams include secure wallets, verifying websites, researching projects and their community, employing multi-factor authentication, and being cautious of suspicious links.
Secure Wallet Providers
Opt for wallet providers with a strong reputation for security and reliability. These wallets often come with enhanced protection features and regular updates to safeguard your crypto assets. In particular, SWEAT Wallet’s Growth Jar contracts have been audited by Hacken. Check security ratings of popular crypto wallets.
Strong Passwords
Use complex and unique passwords for blockchain accounts, combining letters, numbers, and symbols. This practice significantly reduces the risk of unauthorized access to your digital assets.
Two-Factor Authentication (2FA)
Implement 2FA on all crypto accounts as an additional security layer. It requires a second form of verification, like a text message or an app notification, making it harder for unauthorized access.
Biometric Features
Utilize biometric security features such as fingerprint scanning or facial recognition for accessing your crypto wallets. These features offer a personalized layer of security that is difficult to replicate.
Diversifying Wallets
Spread your crypto holdings across multiple wallets with the right balance of hot and cold storage. This strategy reduces risk, as it ensures that not all assets are vulnerable in case one wallet is compromised.
Community-Driven Verification
Sometimes, the community around a crypto asset can provide insights into its legitimacy and potential. Engage with the community, ask questions, and look for consensus on the project’s credibility and future prospects.
Understand Market Cycles
Crypto markets have cycles, and understanding these can help in making informed investment decisions. Educate yourself on market trends and cycles. This knowledge can aid in determining the best times to enter or exit the market.
Conclusion: Navigating the Crypto World Safely
Watch out for these red flags!
Stay informed, practice due diligence, and adopt robust security measures to protect your $SWEAT and other digital assets.
Furthermore, join Hacken’s Trust Army, a research and educational platform where you can actively investigate crypto projects and contribute to helping the community steer clear of scams.
This guest post was crafted by the Hacken team.
These materials are for informational purposes only and are not investment advice or an invitation, recommendation or solicitation to buy, sell or hold any crypto asset or to engage in any particular trading strategy. Many crypto products and markets are unregulated, and you likely will not be protected by government compensation and/or regulatory protection schemes. Crypto assets are high-risk investments and the unpredictable nature of crypto asset markets can lead to loss of funds. Tax may be payable on any return and/or on any increase in value of your crypto assets. You should seek independent professional counsel from your investment advisor and tax advisor in connection with any acquisition or disposition of crypto assets.
