Scam

What Is a Scam? 

Scams are dishonest activities that use false schemes to target cryptocurrency investors. Cryptocurrency scams can take on many forms. For example, people experienced blackmail, fake investment plans, business investment schemes, and even fake initial coin offerings (ICOs).

Cryptocurrency frauds are a growing problem, with many cryptocurrency investors have been scammed at one time or another. In most cases, scammers send text messages or an email asking the user to take advantage of the offer by paying through Bitcoin. Ponzi schemes are also common. In these, existing investors in different currencies are asked to invest and bring in more investors to earn a higher profit. This is like a pyramid scheme, in which the older investors are paid off with funds from newer investors. 

The scam people usually tempt investors with the lure of quick or high profits. In reality, the fraudsters are just stealing from new investors to pay off older investors. Once the scam starts to die, the people at the tail end, the latest investors, do not get paid. 

A prime example of a scam is the SEC v Shavers case, where the scammer promoted an investment plan in which the investors could earn up to 7% weekly returns. The scheme attracted investors with the promise of buying more BTC with their money. One scam involving BTC and ETH defrauded investors of approximately $2 billion in 2019.