Crypto Scams: Beating Cryptocurrency and NFT Fraud

Cryptocurrency scams are rife. It was bound to happen in a new marketplace, where investors want to get in early and benefit from escalating hype.

The good news: There’s a path to a more secure decentralized finance (DeFi) ecosystem. Read on to see how we are building a Three-Way Ecosystem for that — and, in the meantime, how to spot and avoid the crypto scams.

Fake Crypto Investments

Before you invest in a newly announced cryptocurrency, look out for these warning signs:

• Any email announcement that asks you to click a link (the classic phishing attack that tries to install malware on your device)
• Offers of guaranteed returns
• A countdown clock
• A complex but vague whitepaper (or no whitepaper). Before bothering to read it, look into the founders’ backgrounds — there are known bad actors out there.
• Spoofed crypto exchange sites — for example, a website or app that looks like the real Coinbase but isn’t. Check for a legit domain name, and download apps only from official app stores.
• Spoofing of a legitimate initial coin offering (ICO)
• Announcements on social media from influencers or celebrities — their accounts may have been hacked! Search the web for an official press release stating the person’s affiliation with the project.

Market Manipulation and Rug Pulls

One common scam is the “pump-and-dump,” where fraudsters lure investors with false information. Buzz or increased activity rockets up the value of the token/property, then the scammers disappear — with investors’ money. This is the classic “rug pull,” like the Squid Game fraud of Fall 2021. The coin may even have been structured so that (unknown to you) you couldn’t sell it if you wanted to.

This common type of scam is one that the Arkius® Three-Way Marketplace is designed to foil. We’ve created a way to make transparency about new projects the rule rather than the exception. See “Beyond Wonderland” to find out how we plan to stop cryptocurrency rug pulls.

Giveaway Scams

Here, scammers lure investors through social media, YouTube videos, or DM links to a well-known exchange or a celebrity hosting a giveaway. Hard-to-verify information is posted rapidly and under the radar before it can be denied. Even a supposedly verified account can be fake. For example, if it has a green check mark, make sure the mark looks and works as it does in other verified accounts.

Participants are told they must send a certain amount of cryptocurrency to the host’s wallet for “verification”; then the scammers abscond with it. In May 2021, for example, scammers bilked investors out of an estimated $10 million with fraudulent giveaways capitalizing on popular interest in Elon Musk’s support of the cryptocurrency Dogecoin.

Always research an offering and the person or entity offering it. Verifying their identity is critical.It can be tricky, but it’s essential to complete your own due diligence before sending any crypto. Once it’s stolen, you can never get it back.

So how can you really know who you’re interacting with? At Arkius we have developed an authentication layer that makes sure offers are verified by Certifiers before you will even see them.

NFT Scams

All the money whipping around the NFT space has made it the latest breeding ground for scams.

• Pump-and-dump schemes have appeared in the NFT market.
• Buyers have fallen prey to catfishing.
• NFTs can be plagiarized or counterfeited.

Research the artist. A legitimate one will have a professional presence, for example with a verified profile on the NFT marketplace where they’re listed, and/or a following on their Discord channel. NFTs featured through the Arkius community will be certified, assuring you that you’re not being victimized by scammers.

Other Scams

At Arkius, we’ve spent months researching crypto scams. You’ve already guessed what we’ve found: Ick! We’ve learned too much about the scams above. You may also run into:

• Fake wallets: When setting up a digital wallet for cryptocurrency trading, use a well-known wallet service such as MetaMask or Coinbase.
• Employment scams: Promising a lucrative crypto job, scammers charge you for “training,” then vanish with your money.
• Fee scams: Code in a new cryptocurrency diverts much of a token’s value to the issuer — a percentage they can increase at will. Recently, a coin called MetaMoonMars was found to have raised its fees to 99% shortly after launch. Buying a tiny amount first (e.g. $1) and then selling shortly afterwards at about the same price will show you if exorbitant fees have been charged.
• Anyone who insists on payment in crypto
• Anyone who promises rewards for recruiting others

Avoiding the Pitfalls

Use larger, reputable exchanges that provide detailed information and explanations and make it easy to track value. Research all coins, brokers, and exchanges before investing.

To be extra safe, avoid newly launched cryptocurrencies altogether.

How Arkius Plans to Build a DeFi Ecosystem Based on Trust

But should the entire due diligence burden really rest on your shoulders? You just want to participate in the cryptocurrency or NFT market. Other decentralized finance (DeFi) investments may come along too. Shouldn’t there be a way to screen out the bad actors, the questionable offers?

Arkius makes trust an effortless process. Our mission is to help investors, consumers, and crypto entrepreneurs create a global DeFi ecosystem driven by authentication, not blind trust. Arkius’ Three-Way Ecosystem — Members, Certifiers, and Casters (providers of content or advertising) — gives the community member or investor confidence that they will receive only content which has been validated by third-party reviewers — Certifiers — and which aligns with the Member’s interests.

Join us!