Investing in crypto is the new trend – everyone seems to be doing it successfully.
If you want to be a daring investor instead of one who ties all their money in government bonds, you’ll want to add some cryptocurrency to your portfolio. Or, some blue-chip stocks.
Well, they always tell investors not to put all their eggs into one basket, right?
But here’s the deal:
A wise crypto investment can skyrocket your income if you know when to buy and sell it.
At the same time, you have to steer clear of investment scams, which happen by the hundreds in Singapore. Even educated professionals were unable to run away from crypto scams!
We’ll discuss the most common crypto scams below and tell you how to avoid such scams.
Types Of Crypto Scams In Singapore
1. DeFi Rug Pulls
Decentralised Finance is a name given to several systems that use blockchain technology – basically, anything that’s not related no centralised finance like fiat currency.
This investment scam is very basic:
Some savvy scammers pretend to create a DeFi project that will change the world and bring you heaps of money in the process. Of course, you need to invest some to get some.
Next, the scam artists will advertise their project on the social media and platforms you’re on. Twitter, Telegram, Reddit – you’ll see what they want to see.
Enter FOMO.
Yes, your fear of missing out on these skyrocketing returns will prove the old proverb that greed makes people forever poor. So, after you and others fall into this project’s trap, the scam artists simply withdraw the cash you’ve put into their scheme and disappear.
Poof.
It’s your run-of-the-mill pump-and-dump move.
Here’s how you recognise it:
- Significant price increases followed by rapid decreases within a short timeframe
- Too-good-to-be-true yields (if it is too good to be true, it probably isn’t)
- Anonymous creators
- The project relies on glamorous marketing, while its actual uses are vague
- It lacks a liquidity lockup that would protect your funds from being stolen
Examples: Meerkat Finance’s creators scooped 31M in just a day. Of course, the funds could have been the target of a hackers’ attack. Anyway, whoever did it had the work cut out for them, thanks to the lack of liquidity lockup.
After running into crypto scams, some poor individuals lost their life savings and had to resort to credit counselling organisations for help.
2. Fake Cryptocurrency Exchanges
Legit cryptocurrency exchanges are practical tools in the world of crypto because they allow you to change and trade your coin. These services are pretty much the crypto version of traditional brokerage accounts.
But there’s a problem: Some of these crypto exchanges are illegitimate and, therefore, unregulated. So any crypto investment you do on these platforms will shave off some – or a lot – of money off your account.
Here’s how you can recognise this investment scam:
The promotions that advertise the exchange are a million levels above any other similar service on the market. Think plenty of freebies and lending rates that go through the roof.
Except that’s just a trick.
Instead, you’ll get:
- More considerable fees than you’d expect, both for registration and withdrawal
- A lot of pressure to put in more funds
- A difficult withdrawal process
- Spam messages that will ask for continuous recharging
- Lots of unsolicited offers from pretending brokers or financial advisors
And of course, there’s always the chance the authors will disappear with your money.
Example: BitKRX is a famous fake crypto exchange that was exposed in 2017. The platform attracted many clients because its name bears a remarkable similarity to Korea Exchange (KRX). Thus, investors thought the exchange was legit and so used it for Bitcoin purchasing. They only knew something fishy was up when they tried to withdraw from their funds and noticed their cash disappeared.
3. Social Media Loan Scams
Loan scams can spread like wildfire on social media platforms. A popular loan scam is starting an online relationship with someone and then pretending an accident happened. Of course, this accident will happen just as you’re supposed to meet face-to-face with your lover. Thus, you’re more inclined to send them the money they asked for.
But that loan scam is at a micro-level.
Here’s what can happen at a macro level:
A celebrity famous for endorsing cryptocurrency will allegedly give you something if you send them your crypto. The hackers will make everything look as legit as possible.
Here are the tell-tale signs:
- A celebrity or a famous group allegedly asks for your money. But that never happens in reality.
- The promise sounds too good to be true. For example, they guarantee to double or triple your revenues without any work.
- The hype and FOMO are through the roof.
- The transaction doesn’t happen on a valid platform.
Example: Elon Musk’s free Bitcoin giveaway is a well-planned loan scam because Musk has recently had a lot to say about Bitcoin. So, when hackers created that fake account promising to double people’s BTC deposits, many unsuspecting people thought that whole scheme sounded legit.
How To Protect Yourself From Crypto Investment Scams
Even though crypto scams are widespread, it doesn’t necessarily mean you have to fall prey to them. You can protect yourself from various investment scams without breaking a sweat if you follow the steps below:
1. Research, Research, Research
Before you invest, trade, or lend your crypto, make sure that everything’s legit:
- The platform
- The team behind it
- The person you’re sending money to
Here’s how you check that:
- Find the company’s website
- Read about its founders and employees – try to find them on LinkedIn, social media, or in the news
- Check the company’s social media channels to see how far it goes, what it’s posted before
- Read user reviews and check whether those reviews are real
- Try searching about the topic on Twitter and Reddit. There are usually lots of helpful comments found on them.
2. Don’t Rush Into Anything
FOMO creates a false sense of urgency to push you into making hasty choices. For example, when a platform promises incredibly high returns if you invest funds before the end of a specific promotion, you’re more inclined to take that risk.
But that’s a bad idea.
Instead:
- Take your time to think about your investment – how it fits in your budget; how it works in your investment portfolio.
- Ensure the project authors are legit.
- Make sure their product is valuable and likely to succeed.
3. Follow Your Instincts
Do you know that little voice in the back of your head telling you to stay away from something?
You should always listen to your gut instinct. And if that gut instinct is about a specific crypto investment, you have all the more reasons to heed your inner voice.
4. Nothing’s Too Good To Be True
All investment scams – crypto scams included – initially sound like the universe has lined everything up so you could get a treasure.
But here’s what you should remember:
When the returns are very high, so are the risks. Besides, it’s virtually impossible to get 100% or 200% profit on your revenues without any work.
The universe doesn’t love anyone so much.
5. Never Invest More Than You’re Prepared To Lose
Crypto isn’t a safe, surefire investment like government bonds. These things are highly volatile, so they’ll increase or decrease in value enormously for the average investor. For example, a Bitcoin that’s worth $50,000 now can value $20,000 tomorrow.
And one company’s action can wipe out millions of dollars worth of crypto from the market without any heads-up.
Crypto Scams Conclusion
Investment scams are flourishing in the crypto world, but that doesn’t mean you’re condemned to lose your money. Do your research, follow your instinct, and use sound investment analysis before jumping onto any new project.
Besides, crypto are risky investments, so it’s wise to diversify your portfolio with safer assets too. Consider stocks, ETFs, government bonds, and even investing in gold.
But, if you really want to make crypto part of your portfolio, go for well-known cryptos like Bitcoin or Ethereum.
Getting Financial Help When You Need It
If unfortunately that you’re caught in a tricky financial situation, you can seek Credit 21’s help. Credit 21 is a well-known licensed moneylender in Singapore, with close to 20 years of experience.
Our office is located at International Plaza (Tanjong Pagar MRT). With more than 500 positive Google Reviews and our fast 3-minute loan application process, you might be able to get your loan in hours! You can apply here.
