Our Blockcircle members frequently come to us with reports about scams. Here we outline some common types of scams and how to avoid them.
Common Types of Crypto Scams
1. Phishing Scams
- What They Are: Attempts to steal sensitive information like wallet passwords or private keys.
- How They Work: Scammers send seemingly legitimate emails or messages leading to fake websites where victims unknowingly enter their details.
2. Fake ICOs (Initial Coin Offerings)
- What They Are: Fraudulent fundraising events for nonexistent cryptocurrencies.
- Avoidance Tips: Exercise caution with new coins promising high returns, especially if they lack credible information or a solid background.
3. Ponzi and Pyramid Schemes
- What They Are: Scams paying returns to earlier investors using new investors’ money.
- Spotting Them: Be skeptical of schemes promising quick, high returns dependent on an influx of new participants.
Identifying and Avoiding Scams
Key Red Flags
- Unrealistic Promises: Offers that seem too good to be true usually are.
- Lack of Transparency: Legitimate projects have clear documentation and identifiable, reliable teams or backers.
Research and Verification
- Initial Research: Start with reliable platforms like CoinGecko for accurate cryptocurrency information.
- Auditing Tools: Use external auditing tools like Token Sniffer, Quick Intel, Go Plus, and Hapi for deeper analysis.
Protect Your Data
- Confidentiality: Never share your private keys or wallet passwords.
- Caution with Links: Be wary of links promising fake airdrops, especially on social platforms like Telegram and Twitter. Verify the authenticity of people contacting you through direct messages or emails.
How Blockcircle has helped Identify and protect members from scams
Blockcircle endeavors to alert members to any security risks and scams as soon as they occur by Public Service Announcements (PSA). Often when a scam, exploit or security risk appears we only have partial information and have to act quickly using our experience to provide as much information to members as we can. Here are some examples of past PSA’s;
PSA on a smart contract vulnerability from a commonly used open-source library in the web3 industry
PSA on the recent Ledger Connect software exploit
PSA on scam airdrops
