Cryptocurrency became one of the most prominent developments in the fintech space ever since Bitcoin was created. However, while crypto has some valid value propositions, it’s also true that it’s still being used by scammers to target individuals who are new to the space. In this Macropay Scam Alert, learn about the most common crypto scams and how to combat them.

According to crypto security firm Chainalysis, illicit wallet addresses in crypto have received up to $14 billion worth of cryptocurrencies in 2021, hitting a new all-time high compared to the previous year. In 2020, $7.8 billion in crypto was recorded.

In this piece, enhance your knowledge by diving into the prominent crypto scam schemes to avoid becoming a victim. With this, the focus will be on rug pulls, honey pot scams, and fake giveaway scams.

Rug Pull Scams

Rug pulls are one of the most common crypto scams today. It's a well-known scam within the crypto space where developers market their projects only to run away and abandon them completely after taking investors' money.

This type of scam often happens in decentralized finance (DeFi). First, developers create a crypto token, list it on a decentralized exchange (DEX), and then pair it with some of the top cryptocurrencies like Ether (ETH). Once many interested investors swap their ETH with the project's token, the developers will withdraw the pair's liquidity and drive the token's price to zero.

With rug pulls, developers bait unsuspecting investors through hype marketing. They use social media platforms like Twitter, Telegram, and Discord to attract potential investors, only to run away with their funds.

Honeypot Scams

One of the more advanced scams in the crypto space is called honeypot scams. Even experienced traders in the crypto space can fall for this type of scam as it’s very hard to spot. In simple terms, a honeypot is a pot of wallet where your crypto funds can come be deposited but can never leave.

For example, a crypto token launches, and excitedly, the victim starts buying the coin. However, scammers often insert a code within the token’s smart contract that prevents any other crypto wallet but their own to withdraw. Leaving the victim with coins that can only be withdrawn under very specific circumstances.

Fake Giveaway Scams

Ever since the advent of cryptocurrencies, fake giveaway scams have been around. In this type of crypto scam, malicious entities pose as famous personalities like Elon Musk or Michael Saylor of Microstrategy and often run a fake giveaway event. Sometimes, the attackers pose as prominent entities in crypto such as Binance exchange or Coinbase.

During these fake giveaway events, the scammers ask the users to deposit some cryptocurrencies into a wallet that they will send and promise to return more. In the end, any funds transferred will not be recovered. This type of scam often happens on Telegram or Discord where there is no account verification feature.

Macropay Solves Scams

While crypto is an innovative financial instrument, the current scams in the space prove that the technology is still in its early days and needs time to mature. Because of this, it’s better to opt for surefire technologies that are currently the leading in terms of payments. The recommended solution for payments is Macropay, an open-banking, and alternative payment method platform.

To keep up to date regarding recent scams in the world of tech, keep following the Macropay Scam Alerts.