Millions of cryptocurrency investors have been defrauded by large-scale fraud projects, and in 2018, cryptocurrency-related crimes lost $1.7 billion. Criminals use old-fashioned tricks and new technology strategies to carry out their business in the field of cryptocurrency.
By studying blockchain, cryptocurrency and cybercrime, we can see that some cryptocurrency fraudsters rely on validated Ponzi schemes to use the revenue of new participants to pay back to early investors.
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Others use highly automated and complex processes, including automation software that interacts with Telegram, an Internet-based instant messaging system that is popular with people interested in cryptocurrencies. Even if the cryptocurrency plan is legal, the fraudster can still manipulate the price in the market.
However, there is a basic question: First, how are investors attracted by cryptocurrency fraud?
A steady stream of new scams
Some cryptocurrency fraudsters use people's greed and promise high returns. For example, a group of unknown scammers run the scam robot iCenter, which is the Ponzi scheme of Bitcoin and Litecoin. It does not provide information on investment strategies, but somehow promises investors a daily rate of return of 1.2%.
The iCenter scam works through group chat on Telegram, which starts with a small group of scammers who get a referral code, share it with others, and let them join the chat on blogs and social media. The new group of people began to be confused by the scammers in the group. Some newcomers decided to invest, and the liar asked them to deposit the bitcoin in a separate wallet and put it for 99 or 120 days to get a high return.
During this time, new investors often use social media to share their own referral codes with friends and contacts, allowing more people to participate in group chats and investment plans. These funds have no actual investment in any legal business. Conversely, when a newcomer joins, the person recruiting them gets a certain percentage of the new funds, and the cycle continues, with some of the new investor's funds being allocated to the early participants as dividends.
Some members have worked hard to raise new funds, post tutorial videos and pictures of their own large amounts of money as a temptation to join the scam.
Constantly fabricated lies
Some scammers will deceive directly, and the founders of OneCoin, the most well-known Ponzi scheme in the encryption community, deceive investors by $3.8 billion by convincing people to invest in non-existent cryptocurrencies.
The basis of other scams is to use jargon or expertise to claim to impress potential victims. Global trade scammers claim that they use the price differentials of various cryptocurrency exchanges to profit from so-called arbitrage, simply buying at low prices and selling them at higher prices. They can really defraud investors of money in this way.
Global transactions also use robots on Telegram, where investors can send balance inquiry messages and get responses to their account balances, and sometimes even see a 1% increase in balance within an hour. The rewards look like this, who can blame people on sharing plans with friends and family on social media?
Exploiting friends and family
Once the program is launched, it will remain active through social media for at least some time. A person is attracted by the huge reward promise of cryptocurrency investment and spreads the scam to friends and family.
Sometimes the well-known KOL participation will make the scam look more credible. For example, the main characters behind GainBitcoin can make some Bollywood celebrities endorse them. He even tried to make himself a celebrity and claimed to be a "cryptocurrency master." Because the investment cost he leads is between $769 million and $2 billion.
Not all celebrities know they are involved. In a blog post, iCenter launched a video that is said to be the endorsement of Dwayne "The Rock" Johnson, holding a logo marked with the iCenter logo. The videos of Justin Timberlake and Christopher Walken were deceptively edited into their praise of iCenter.
Fraudulent initial coin product
Another popular scam technology is called “initial token distribution.” A potentially legitimate investment opportunity, an initial token offering is essentially a way for a startup cryptocurrency company to raise funds from users: in exchange for bitcoin and ether An active cryptocurrency such as a coin promises customers a high return on the future of tokens.
Many of the original token products have proven to be a scam, organizers use sly words, and even rent fake offices and make good-looking marketing materials. In 2017, a lot of speculation and media reports about cryptocurrencies triggered a lot of initial token fraud. In 2018, about 1,000 of the original token projects collapsed, and supporters lost at least $100 million on this. Many of these projects have no creativity, and more than 15% of projects copy their code and concepts from other cryptocurrencies.
Investors seeking new technology are still interested in blockchain and cryptocurrencies, but it should be noted that they are complex investment products, even for those who sell them. New investors and related experts have become victims of scams.
In an environment like the current cryptocurrency market, potential investors should be very careful about the funds they invest in and make sure to find out who is involved and what the actual plan to make is instead of deceiving others. (chain to finance)