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You should study assets and projects carefully when investing money in cryptocurrency. There are many scammers on the crypto market who disguise themselves as promising startups perfectly. We will tell you what a scam is, which scam projects have become the loudest in history, and how not to become a victim of scammers.
What are scam projects?
Cryptocurrency scam is a project created by scammers. Scammers have quite a few ways to deceive users in the field of cryptocurrency. There are still no laws that would regulate virtual assets due to the fact that in most countries of the world. Tokens are especially popular among scam projects. Tokens are not means of payment unlike cryptocurrencies; they are used to create a digital balance of assets, gain access to some crypto services, or as a digital alternative to securities. Tokens do not need to create their own blockchain, for example, the Ethereum platform allows you to generate tokens of several standards easily and quickly.
The largest scam projects
One of the most famous scam projects in the history of the crypto industry was PlexCoin. Its creator, Dominique Lacroisa, was arrested in November 2017 for fraud of over $15 million. Lacroisou promised investors a 13-fold increase in returns on their investments and raised money ostensibly to improve the transaction system, which was supposed to compete with Bitcoin.
An equally high-profile scandal occurred with ICO coins CoinDash. It became known that the wallet for collecting money does not belong to the creators and owners of the project. The platform was hacked by hackers, the scammers changed the wallet address, after which the asset holders lost more than 7 million funds invested in coins.
One of the largest scam projects is the Cryptsy exchange. Users began to notice that the platform was working with technical errors, often delaying payments. The administration of the site announced a hacker attack after a short silence. As a result, the scammers managed to steal 130,000 Bitcoins and 300,000 Litecoins. During the year, the platform tried to rehabilitate itself and recover, but then it turned out that its creator had disappeared, and about 5 million dollars of investors disappeared with him.
How to choose a safe project for investment?
Even experienced crypto market players are not immune from mistakes, and everyone can become a victim of fraud. One careful approach to investment projects helps to secure your funds. Before investing your own money, study the offer in detail:
- evaluate the relevance and perspective of the idea;
- find out as much information as possible about the creators of the project, study biographies, their identities should not be hidden;
- get acquainted with the previous projects of the developers;
- examine the proposed strategy and its adequacy;
- evaluate the technical component of the project;
- read the opinions of experts;
- read feedback on active developer projects.
Why didn’t LUNA scam, and why did it fail?
The Terra developer project with its LUNA token and UST stablecoin is often called a scam on the network, but this is not so. This is one of the biggest failures in the history of crypto, but the project was not created for fraud.
The LUNA token was one of the ten largest in the market by capitalization, and today it is worth almost nothing. The token rate collapsed by more than 99% in May 2022. LUNA was created as part of the Terra ecosystem, for the connection of fiat currency and crypto, the company released the Terra USD stablecoin, which cost $1. For the stability of the stablecoin, an algorithm was created: as soon as the value of the token fell below the dollar, the algorithm automatically issued new coins, they were exchanged for Terra USD until the stablecoin rate again reached $1. The collapse of the token was caused by the actions of the company’s investor, who put up $300 million worth of stablecoins for auction.
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