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How to Spot Crypto Fraud Immediately and Invest Safely


Since the crypto sector as a completely new industry opens up numerous business opportunities, it will also attract crypto fraud (as does everything else where money can be made). Before deciding on an investment, you should therefore never forget to do your own research and make sure that you really understand what you are spending your hard-earned money on. If you stick to this mantra, then you will quickly notice which offers are legitimate and which are rather questionable.

Recognizing crypto fraud early on saves you time, effort and many tears.

However, a comprehensive search takes a lot of effort and time, which is usually limited. An additional benefit is therefore knowing the basic features of crypto fraud and scam coins. After all, this way you have the opportunity to sort out scam coins as quickly as possible and invest your time in the really interesting investment opportunities.

At first glance, the identification of scam coins or other crypto scams may not always be that easy. But if you look more closely, you will notice characteristics that most offers with fraudulent intent have in common. In this article, you’ll find the biggest red flags that show you which crypto offerings should not be regarded as serious investment opportunities.


The 5 most common red flags of a scam coin

Fortunately, most scam coins do not even bother to cover up their intentions. Also, even if that’s not true for everyone, many crypto scams count on you not doing any due diligence research and the allure of their promise of profit. Apart from these promises, however, their business model usually stands on shaky ground and is kept rather ominous. If you know the biggest red flags, most scam coins can be quickly identified.

These red flags should make you run for the hills:

  1. The team members do not appear in person.
  2. The white paper is non-existent, incomplete or does not seem well thought through.
  3. There are no or very few information about the coin on the internet (see e.g. Reddit).
  4. The basic code of the project is not open source and thus not freely visible.
  5. You are promised a safe (and usually faster than usual) profit.


You should also stay away from the these investment models

Of course, simply buying a specific currency directly isn’t all the crypto world has to offer. To protect you from crypto fraud, it is also worth taking a closer look at the underlying business model in these cases as well. If you pay attention to a few key features, you can quickly uncover investment offers, you should better keep your hands off.

Avoid the following:

  1. Offers that promise constant profits (subscription packages, cloud mining offers, etc.)
    At first, these usually pay their users the promised profits for a while. However, once they have attracted enough customers, the crypto fraud is usually revealed by the fact that the operators suddenly disappear overnight with all the invested funds. Even if you are one of the lucky few to get something out of it in the early stages, the money is only paid out after jumping through hoops (e.g. you can only withdraw money after a certain period of time has passed).
  2. Ponzi schemes (e.g. Bitconnect)
    Ever heard of an insider tip for which you only need to register for a fee and recommend a specific product to others to earn a quick and high commission? If this is the main purpose of the business, then it is a snowball system. The profit of such businesses do not result from the sold product, but from the paid fees of the participants. These systems are commonly used for crypto fraud, which ends when the operators run off once they made enough profit.

But what about Binance and their recommendation system? Is there a difference?

Yes, there is. For starters, the crypto exchange doesn’t make any big promises (you get a small reward over time for recommended users). What’s more is that this is not the main purpose of the company. As one of the largest crypto exchanges, Binance earns its money primarily with the trading fees of its users. This means, it is a legitimate offer.


So how can you invest in crypto safely?

Recognizing crypto fraud and knowing what NOT to do is all well and good. But how can you make sure you have found the perfect opportunity and are ready to invest?

Because we are still talking about volatile new currencies, investing in crypto always involves a certain degree of risk. For some types of investments, however, this risk is much lower than for others. If you want to play it save then you should pay attention to these golden rules:

  1. Buy your coins directly on a large crypto exchange.
    Buying your cryptocurrencies on a reputable crypto exchange that has been around for a longer period of time (like Binance or Coinbase) is the safest way to prevent crypto fraud and make sure you actually have access to your investment.
  2. Keep your cryptocurrencies in your own wallet.
    Another important way to protect yourself from crypto fraud is to not leave yourself open to larger hacker attacks. If you send your crypto assets to your private wallet after purchase, your money will not be lost in the event of a possible hack, bankruptcy or crypto fraud on the corresponding crypto exchange it would otherwise be stored on. After all, you keep it yourself and have direct access to it at all times.
  3. Trade less.
    The more you trade, the higher your risk (not only regarding possible crypto fraud, but also your profit). The reason is quite simple: You pay more trading fees, with more trades you also have more opportunities to make losses and to quickly take advantage of opportunities, you need to store your money on platforms of third-parties more often, which in turn (as mentioned above) has its own risks.
  4. Decide on a long-term strategy and stick to it.
    The more long-term your strategy, the safer you are with it. This will also result in you not having to follow the latest developments of the crypto world at all times and will lower the risk to fall for psychological traps such as FOMO (fear of missing out) with rising prices or FUD (fear, uncertainty and doubt) when the prices are falling. This way, you are less tempted to make rash decisions. Without constant emotional ups and downs, you’re also less prone to believe big promises and crypto fraud. Don’t forget: Nobody can predict short-term market developments accurately. Even long-term trends are speculative, but certainly more predictable. Therefore keep in mind: If in doubt, your best bet is to HODL (long-term investing) and hope for a general increase in value of previously carefully selected crypto currencies.

Of course, sticking to all these rules can’t make 100% sure everything will go according to plan. Nevertheless, the following mantra to which all of the mentioned lessons can be broken down to is your safest bet:

As with other assets, you should trade cryptocurrencies only to the best of your knowledge and belief!

This way, one thing will certainly be clear and that is that you will not be easy prey for crypto fraudsters and your assets will always be as secure as possible.

Your opinion counts!

You can think of other common features of crypto fraud? If so, we’d love for you to share them in the comments below.


Photo by:

Evan Kirby



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Janine is a professional crypto reporter with a fascination for the potential of cryptocurrencies (which she discovered back in 2013) and a passion for discussing social phaenomena and societal changes. When she is not sitting in front of her computer, she can be found walking her aussie or reading one of the novels by Dan Brown.