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Search Terms. During that time, the newcomers often use social media to share their own referral codes with friends and contacts, bringing more people into the group chat and into the investment scheme. Instead, when new people join, the person who recruited them gets a percentage of the new funds, and the cycle continues, paying out to earlier participants from each round of newer investors. Some members work especially hard to bring in new funds, posting tutorial videos and pictures of themselves holding large amounts of money as enticements to join the scam.
Some scammers go for straight-up deception. Other scams are based on impressing potential victims with jargon or claims of specialized knowledge. The Global Trading scammers claimed they took advantage of price differences on various cryptocurrency exchanges to profit from what is called arbitrage — simply buying cheaply and selling at higher prices. With returns looking like that, who could blame people for sharing the scheme with their friends and family on social media?
Once a scheme has started, it stays alive — at least for a while — through social media. One person gets taken in by the promise of big returns on cryptocurrency investments and spreads the word to friends and family members. Sometimes big names get involved. Videos of Justin Timberlake and Christopher Walken were deceptively edited so they appeared to praise iCenter, too. Many initial coin offerings have turned out to be scams , with organizers engaging in cunning plots, even renting fake offices and creating fancy-looking marketing materials.
In , a lot of hype and media coverage about cryptocurrencies fed a huge wave of initial coin offering fraud. Investors looking for returns in a new technology sector are still interested in blockchains and cryptocurrencies — but should beware that they are complex systems that are new even to those who are selling them. Newcomers and relative experts alike have fallen prey to scams.
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Cryptocurrency crime had a record-breaking year in , with a new report finding scammers took $14 billion worth of crypto last year. Within the context of the cryptocurrency industry, phishing scams target information pertaining to online wallets. Specifically, scammers are interested in. Scams are common online and cryptocurrency exchanges are no different. Read about four common cryptocurrency scams and how you can recognize and avoid them.