You can quickly go from having nothing to shopping for a Lambo by investing in crypto. But you can also lose everything to crypto scams. Between April and July 2021, African investors lost US$4 billion to crypto scams.

You must know how to differentiate between legit crypto investment opportunities and scams.

The following are six red flags to watch out for when looking for opportunities in the crypto space:

1. Being expected to send crypto to a wallet you don’t control

With blockchain, everyone is supposed to be their own bank. However, many come into the space hoping a benevolent third party will invest on their behalf. They become victims of scammers who take their crypto with a promise to multiply it for them.

The scammers then disappear with the money, and the investors have nowhere to turn to recover it.

Whenever someone asks you to send your crypto to a wallet you don’t control or promise to buy crypto on your behalf, be suspicious. At all times have complete control of the crypto you hold, trade, or stake.

2. Being expected to recruit to make more money

Most crypto scams have elements of a Ponzi scheme and multilevel marketing. You are persuaded to recruit friends and family to increase your returns. The money used to pay early investors almost always comes from funds submitted by new recruits.

The scheme goes on until there is less money coming in than what is needed to make due payouts or the founders decide to cash out and run.

Interrogate how promised profits are generated. If it isn’t making sense, don’t invest.

3. Aggressive and emotional marketing

Scams must always bypass logic and get to emotions like greed, fear, and euphoria. They also find it necessary to engage celebrities to market themselves. There is also often the use of trendy concepts like artificial intelligence and bots in vague settings.

If you notice that the marketing of a crypto product is focused more on emotion than logic, you should reconsider or seek advice from a trusted expert. Also, watch out for planted reviews on third-party sites.

4. Poorly written or plagiarized content 

A project that wants to make a quick show and disappear often does not see the need to invest in high-quality and credible content.

For example, a scam is likely to have a shallow white paper that is full of errors. They might borrow critical concepts or plagiarize an entire white paper.

Also, watch out for empty text that is made to sound smart and intellectual.

5. Suspicious founders and administrators

If you have difficulty figuring out the past of those running a project, there are chances they are hiding from their past. Often scammers jump from one scheme to another, like was the case with Sergei Mavrodi, the founder of MMM Global.

They might use a big celebrity or a well-known personality within the space in their promotional material to deflect attention from themselves. In some cases, the celebrity is not even aware that they are being used for this purpose.

6. Abnormally high and assured return on investment

No one can predict with certainty how the crypto market will turn out the next day. Therefore, you should be suspicious if anyone guarantees you fixed returns like 10% or $100 every day, week, or month.

In a nutshell, trust your analytical brain more. If a product does not make sense, do not invest in it.

1 COMMENT

  1. great ,thank u for giving us the important info we need . i realize that one the list crypto currency mentioned ,above is scam. i mean ,PI NETWORK , AM WRONG BRO?

LEAVE A REPLY

Please enter your comment!
Please enter your name here