I’ve just received quite a few questions from friends about crypto scam projects, so I decided to write a comprehensive roundup for everyone to refer to.

First, what is a scam? Simply put, it’s deception carried out by individuals or organizations to steal assets—especially cryptocurrency. Those who carry out these actions are called Scamer, and they will face penalties if they’re discovered. With the development of the internet, scam methods have become increasingly sophisticated and complex, and they can spread to many countries, affecting millions of victims.

When you participate in crypto, you’ll often hear the term “getting scammed”—meaning falling into a scam trap. What’s notable is that many investors know full well it’s a scam, yet still join because of the high returns. A classic example is a Ponzi scheme, where the money from later participants is used to pay earlier participants, making those who enter early benefit. But when there are no more new members—or when the number becomes too large—the scheme collapses, and investors end up losing money.

There are many types of scams that are common in the market. One traditional method is Scam ICO, which appeared in large numbers in 2017. These Scamer will launch new cryptocurrency projects, promote them aggressively, hire KOLs to build credibility, and then issue coins through an ICO to raise funds. After collecting a large amount of money, they abandon the project and disappear. Warning signs include: the project has no clear solution, the team is anonymous or has scammed before, the website/whitepaper is shoddy, and the roadmap is unclear.

Another type is a liquidity rug pull on DEX exchanges. The initial project builds a carefully made product, issues tokens, and lists them on Uniswap, PancakeSwap, or Sushiswap. Warning signs include: low liquidity, liquidity that can be withdrawn at any time, and unrealistic promises of high APY. In addition, there are other forms such as locking token buy/sell functions or even self-hacking the project to dump a large amount of coins.

For prevention, you need to research carefully before investing: what solution does the project offer, does it truly need a Blockchain, what is the community like, and what the tokenomics look like. There are currently many tools to check Smart contract code to detect whether holders or founders show bad signs. When connecting your wallet to a website, make sure the website is reputable and secure, and then revoke permissions to prevent misuse.

In summary, understanding the different forms of scam will help you protect your assets better. Invest wisely—always do thorough research before committing your funds. If you have any questions, leave a comment so we can discuss together!