I’ve noticed that many newcomers to crypto often don’t fully understand the various forms of scams, so today I’d like to share my experience about this issue.

First of all, what is a scam? Simply put, a scam is the act of deceiving people in order to seize assets—especially cryptocurrencies. The people who carry out these scams are called scammers, and they will face punishment if they are discovered. The tricky part is that nowadays, with the internet, scam tactics have become increasingly sophisticated. The scale can spread across many countries, affecting millions of people.

What makes scams in crypto happen is usually when an investor falls into a trap and doesn’t realize it. Or even some people know it’s a scam but still join because they’re greedy for quick profits. A classic example is Ponzi-type projects—where the money from later investors is used to pay earlier investors. At first, everyone makes money, but once there are no new investors coming in, the model collapses and everyone loses their money.

When it comes to common types of scams, first is Scam ICO. In 2017, when ICOs exploded, a lot of fraudulent projects appeared. The way it works is very simple: scammers create a new cryptocurrency project, promote it, hire KOLs to build credibility, and then issue tokens through an ICO to raise funds. After they get the money, they abandon the project and disappear. You can recognize this kind of scam by signs such as the project having no clear solution, an anonymous team or previous scamming history, a bare-bones website, a vague roadmap, or a lack of care for the community.

The second type is a rug pull, or liquidity withdrawal. These projects often operate on DEXs like Uniswap, PancakeSwap, or Sushiswap. At first, they build a fairly complete product, then issue tokens and create a liquidity pool. But the warning signs include low liquidity, liquidity that can be locked, or promises of an abnormally high APY. In addition, there are other scam tactics like locking the token buy/sell functions or even hacking the project to dump a large amount of coins.

So how do you protect yourself? First, you must research the project carefully before putting money in. Ask clearly what their solution is, whether blockchain is truly necessary, what the community is like, and what the tokenomics look like. Luckily, there are many tools available today to help check projects. You can review the smart contract to see whether the holders and founders have any issues. When you connect your wallet to a website, make sure that website is reputable and secure. After you no longer need it, remember to revoke approvals to prevent it from being exploited.

In summary, scams are a real danger in crypto, but if you’re cautious and keep learning, you can absolutely avoid them. I hope these insights help you. If you have any questions, feel free to leave a comment so we can discuss together.