A Few Crypto Scam Red Flags to Watch Out For

The cryptocurrency space is full of scammers. Here are a few red flags to watch out for to help you avoid the scams.

RULE: Always do your research. Just because a platform, project, token, or ICO has red flags does not mean it is necessarily a scam. Also, just because something is a scam doesn’t necessarily mean it is illegal or that you will lose money. Life is complex.

  1. In general, red flags include ICOs with phases and bonuses in the presale round (many non-scams have these; however, when paired with other red flags, it is something to watch out for), claims of high and guaranteed returns (common with ICOs and lending platforms), celebrity endorsements, claims of ICOs being SEC-compliant, the ability to invest with a credit card, and promises that the coin will be pumped after it goes to market.
  2. Anything that promises big returns, for example, 1% a day is always a scam, because that level of return is impossible to guarantee. However, a small return like Bitfinex’s returns for margin lenders is not a scam. The trusted exchange, high capital requirement, and low returns are all hints that it is not a scam, and you can confirm it is not with some research.
  3. Anything that makes you follow a “professional trader” and has you margin lending. You can easily lose tens of thousands doing this. Once your money goes in the account, it is never coming out.
  4. Anything that has another person mining for you (like send us money and we will mine for you).
  5. Anything that has you send coins to get more free coins back (like that prevalent Twitter scam).
  6. Anything that requires you to deposit monetary funds into a platform (there are some exceptions).
  7. Anything that takes a credit card.
  8. Some, but not all, crypto gambling sites. Anything with a bonus is likely to be a loophole that requires you to play a lot before you can take your money out (it is like this with fiat too). Statically speaking, you’ll never get your money out.
  9. Almost every way to get free tokens is a scam. See a breakdown of ways to get free tokens for an idea of what I mean.
  10. Any ICO that mashes up buzzwords like revolutionary, blockchain-based, cloud-based, tokenized economy, delivered by drones, with a five-star team, with digital solutions for integration in the IoT. I.e., confusing lingo and jargon.
  11. Analysts who claim to be right all the time and who charge a fee.
  12. Signal groups who claim to be right but offer signals right around the dump phase of a pump.
  13. Pump and dump groups.
  14. Bad or insecure software. Some wallets, internet directions, websites, exchanges are bad news. You need to be extra careful about anything that is built poorly or is hackable.
  15. Mining pools without a solid reputation.

Although some upstanding products and platforms have some of the features above, more often than not a product or platform with multiple red flags is bad news.

Anything that isn’t buying the top coins on the top exchanges and using trusted hardware and software can be dangerous. Trading is hard, and most people lose money. Thus, anything suggesting differently is a giant red flag!

There is no surefire get rich quick in life, but there are lots of surefire ways to get REKT. If you are in the crypto space you either need to level up your trading game, gamble what you can afford to lose or take care to structure your portfolio carefully so it mimics investing in a less volatile asset over time.

If you start seeking out those big returns, you are very likely to get caught up in a Bitconnect or one of those margin lending with professionals gambits.

It isn’t 2010, it is not 2015, and it is not even 2017. Every year it gets harder to get rich quick in crypto, yet every year more and more schemes come along promising such things.

Just look at the charts, yep there are a few chances to get 100%+ gains these days, but there are so many other chances to lose that actually getting those gains is VERY hard to pull off.

I’ve seen a number of people get scammed, and I’ve heard stories from many more. Meanwhile, I’ve heard very few stories of people getting rich without buying early or without being a very good trader. Even those who have done well tend to fall on their faces in the process.

Spoofy, hedge fund X, and some developers got rich at this, but you [assuming you are the average newcomer] are likely to be lucky to get out with your shirt.

Don’t underestimate how careful you have to be and what you are up against in crypto.

The lambo is a lie; the promise of easy money is a lie. It doesn’t matter if you HODL or try to get clever and scalp; only the pros and the lucky are likely to do well);.

Once you accept the reality of crypto, there is lots of room to make reasonable profits with a minimized risk, have lots of fun, and learn some things about trading, investing, and technology.

However, a few bad moves, like investing in Bitconnect, and it is all over. So be smart and be rational when you approach the crypto space.

TIP: If you are already in too deep into a scam, run if you can. Being unable to escape is very likely; only Ponzis will return your money; most scams will have already stolen your money. Learn the lesson, spread the word, and consider shifting to conservative investments or trades in the top coins.

Author: Thomas DeMichele

Thomas DeMichele has been working in the cryptocurrency information space since 2015 when CryptocurrencyFacts.com was created. He has contributed to MakerDAO, Alpha Bot (the number one crypto bot on Discord),...

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Scammers are a big problem for cryptocurrency