The Evercode Lab takes pride in our reputation as the provider of one of the best White Label Wallet solutions available nowadays. We believe in blockchain and crypto. Thus, we hate crypto scammers. We view them as one of the crucial factors why many potential crypto investors and crypto owners are still scared of digital assets. On top of that, crypto scams are an obstacle to further growth of the web 3 industry. The more new owners crypto assets win, the more scammers join the game.

Crypto Scams and Their Negative Consequences 

2021 was a game-changing milestone not only for law-abiding businesses. Sadly, that year was also a breakthrough for crypto criminals and scammers. As the Chanalysis experts stress, last year, ‘illicit addresses’ received $14 billion! In comparison with 2020, $8 billion, it is an ‘impressive’ success. 

It doesn’t sound good! Especially, if you think of the victims. There is another important figure: between Oct. 2020 and April 2021, the US Federal Trade Commission said there were ‘7,000 victims.’ How much did they lose? More than $80 million.

The blockchain industry suffers from scammers in a variety of ways. First of all, in the light of this threat, some governments overreact and impose inadequate regulations on crypto. Some countries go as far as outlawing digital assets as a whole, which is insane. 

Second, many investors get scared of crypto and scrap the idea of experimenting with it. For instance, as some American statistics show, 75% of those affected by crypto scams assume “they’re less likely to invest in the future.” What is going to happen in this case to those fellows? Right, they will lose the race and won’t make it to the web 3.0-driven age.

That’s why we have decided to join many other companies and publish a post to say a couple of words about this danger and how to avoid it. 

How to Define a Scam?

To begin with, “scam” means that, as a result of illegal activities, someone loses money which is grabbed by bad guys. How can it happen? As Investopedia correctly says, there are two general tricks: 

  • The victim is either persuaded to send their digital assets to a scammer as a result of successful impersonation or fraudulent pseudo-investment 
  • Or the victim somehow shares their credentials which allows instant access to their wallets and accounts 

Whatever exactly happens, in both cases people lose value, which is sad for sure!

Thus, two basic guidelines are: 

  • You need to know who you send your digital assets to 
  • Do not share your key with anyone

Types of Crypto Scam
If we dive deeper, these are the most “popular” sorts of scamming: 

  1. Business opportunities: in this case, you are offered a “once-in-a-lifetime” chance to invest and get rich quickly. First, they invite you to their website to learn more. Then you are convinced by bright pictures and fake celebrity endorsements to send your crypto and start earning enormous sums of money ASAP. If you send your crypto, that’s it, you will never see it again.The main red flag: if the opportunity seems to be too good to be real, it is not real.
  2. Impersonation and phishing-based scams: in this case, scammers pretend to be a trusted and legit source, such as government agencies, the bank where you keep your fiat money, one of your service providers, you name it. Typically, one receives an email or a message with a link. Alternatively, you can be redirected to a website that copies your trusted source. You click on the link, enter your key, and that’s it, your assets are gone.The main red flags: you are encouraged to click on the link and make a payment ASAP. In addition, if the address where you end up does not end with HTTPS, LEAVE IMMEDIATELY!
  3. Fake Crypto Applications: making you install their “handcrafted” app is a dream of every scammer. The first thing to do is to NEVER-EVER download a crypto app (of fiat money app) not registered by AppStore and Google Play. On top of that, do not let scammers get you fooled by assuming every app offered via AppStore and Google Play is totally legit. Yes, those guys run background checks, but they are not immune.The main red flags: verify that the spelling and branding messages are 100% correct and coherent. Take the effort to assess the app provider and examine the user reviews.
  4. Good old social engineering scams of other sorts. This includes romance and dating, giveaways, your “friends on social media.” There are too many tricks and patterns in this respect to describe every single one in detail.So the only red flag is “think twice.”

How To Identify Scam: Final Remarks  

The US Federal Trade Commission warns us about these two wide-spread red flags:

  • If crypto is the only viable and mandatory option, it is likely a scam. Unless crypto becomes a new gold standard and a full-fledged legal tender, service providers, callers, individual contractors shall make it possible to pay with both fiat money and crypto.
  • If you are guaranteed enormous returns on investments at given periods of time, it is likely a scam. Pay attention to the current staking rates and let them serve as your reference points

On the basis of our knowledge and industry outlook, we can also cite the following reasons for concern: 

  • Anonymous team: a legit project would never try to hide its team members. Quite the contrary, both personal and corporate reputations are everything. That is why it must always be easy to run a background check via LinkedIn and other social accounts 
  • Insufficient level of activity in the real world and on social media. If the project you are considering does not take part in and attend legit meetups and industry events with many other participants and if their social media presence is limited to success stories and promises of riches, it is a red flag 
  • Lack of proper and verifiable references over time, i.e. at least some years

Stay safe and keep your eyes on your digital asset! The web 3.0 has already arrived, so you are going to need it!