If you try looking up ‘crypto scams’ you will probably find millions of news articles investigating these issues; with multiple cases covering different types of fraud. It is not uncommon these days to see celebrities straying from their usual content to promote altcoins (or alternative coins) and NFTs (non-fungible tokens). Personalities like Paris Hilton, David Portnoy, FaZe Kay, Jake Paul, and Charli D'Amelio are a few of the influencers that have been accused of ripping off supporters and fans of their money.
A term that often gets thrown around in these discussions is ‘pump and dump’. It is a scenario in which a group of people decide to buy stock in a company that has a low market value, and then market the stock as though the company’s value is increasing. As more people buy into the assumption that the company is growing in value, more scammers dump the stock. While they make a high profit, the new investors suffer massive losses. In a general sense, this is illegal, but the crypto market opens new doors for these pump-and-dump investors. Celebrities and influencers with a large fanbase often use this in addition to their myriad of money-making methods.
According to journalist Sean Williams, “The only real catalyst behind the rise of Dogecoin are Elon Musk’s tweets''. Middle-aged people try to use tried and tested methods of making money, and who better to take advice on this than one of the richest persons in the world? Unfortunately, that is not the best financial advice. Youtubers like Cody Ko cautioned people to be wary of these schemes. He even discussed the new funny meme-worthy altcoins which emerged after Dogecoin’s momentary success. Altcoins like Coinye, Cat Coins, GarliCoin, and Dracula Token are all some of the ‘meme altcoins’ that encourage people to invest in them for the joke of it. In his video, he claimed that one of the biggest red flags with these cases is when the influencers promoting the cryptocurrencies claim that they’re not giving financial advice. He then goes on to talk about the various cryptocurrencies that have come into existence that pose as jokes, but people are preying on the audience to get in on the joke so they can dump it.
The self-proclaimed ‘Crypto Queen’, Ruja Ignatova, urged everyone to invest billions into OneCoin, promising that it would be the next Bitcoin. She travelled regularly, trying to convince one audience after another to invest in the ‘Bitcoin Killer’; shortly after which her OneCoin scheme got exposed for not being a cryptocurrency. Investors were quick to find that OneCoin did not have blockchain, the foundation of all cryptocurrencies. Instead, it had a standard SQL database server, which proved that OneCoin was a giant scam after all. Once people began unveiling the horrifying truth behind OneCoin, Ignatova went under the radar and is currently untraceable.
It is undeniable that investing is becoming increasingly important in this digital era. With more people getting into trading and investment, it is vital to be aware of scams and Ponzi schemes. So always do your research before investing. (Not financial advice)