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The growing popularity of cryptocurrency has attracted a lot of positive financial investments. In the same lane, it has also drawn in fraudulent factors seeking to prey on unsuspecting people.

It is important to learn how to distinguish genuine projects from scams, as they pose a threat to the overall health of investors’ assets and the entire cryptocurrency system.

This article will discuss the tools and previous cases of these scams, so it will help you identify similar cases if you happen to come across any of them.

Tools for Identifying Scam Cryptocurrency Projects

The following are tools and resources that can help you identify fake cryptocurrency projects;

Cryptocurrency Research Websites

A cryptocurrency research website is one that provides valuable analyses and statistics on several cryptocurrency websites in existence, which include but are not restricted to historical price charts, trading volume, market capitalization, news updates, and industry-leading research on all sectors and trends in crypto. They list out daily cryptocurrency prices, and credible projects that can be accounted for, and leave out possible scams. Most of these are free to use without a fee and can be accessed by multi-lingual users.

Examples of such sites include CoinMarketCap, CoinGecko, Coinpaprika, and several others.

Scam Alert Platforms

These are websites concerned with the publication of fake cryptocurrency trading sites, which help potential investors tell the real from the fake. On these sites, you can check up on recently discovered scams and their tactics, you can also report sites you consider fraudulent. The Federal Trade Commission is a regulatory body that puts out Consumer Alerts regularly. They have a list of compiled crypto scams from last year. TrendMicro also published a list of fake crypto sites.

Some other sites that can help in this aspect are ScamAdviser, CryptoChainUni, and others.

Blockchain Explorers

These are tools that allow you to view and track all the transactions conducted on a blockchain network. Here, you can verify a transaction, and check out its status and general history. You can also check for the latest blocks, transactions, and addresses of varying blockchain networks.

There are different blockchain explorers for their matching networks. Blockchair helps out with analysis for several networks such as Bitcoin, Ethereum, BNB, Cardano, Ripple, Polkadot, and others. Blockchain.com also has a similar function.

Real-world examples of Notorious Cryptocurrency Scams

These are some highly organized scam heists that shook the crypto ecosystem when they occurred.

BitConnect

BitConnect is an alleged global Ponzi scheme founded by Satis Kumbhani. He was indicted by a federal grand jury in San Diego for swindling investors of $2.4 billion dollars, both in the US and abroad. It was sold out to people as a cryptocurrency lending program, and it used its latter investments to pay off earlier investments. The program shut down unexpectedly after one year of active service.

After this happened, the market price of BitConnect was hiked to create a buzz and attract false demand. The Justice Department seized digital assets worth millions of dollars from BitConnect’s top promoter. Read more about the case here.

OneCoin

OneCoin is a Ponzi scheme founded in 2014 by Ruja Ignatova, based by OneCoin Limited and OneLife Network Limited. Between 2014 and 2016, they raised $4 billion. It was not in active service, and it could not be used to make any purchases. The founder disappeared in 2017 after raising the money.

OneCoin was involved in selling course materials, which were discovered to be plagiarized items. Participants were required to recruit new buyers, posing the venture as a multi-level marketing scheme. In 2016 it was discovered to be a pyramid scheme, where affiliates could not cash out except through OneCoin Exchange which was used to convert OneCoin to other valid currencies.

Read more about the case here.

Conclusion

Encouraging responsible investing in the cryptocurrency space. Report scams to the appropriate regulatory bodies once you notice shady dealings. Verify the claims of projects and reduce the risk of falling victim to cryptocurrency scams. Stay cautious, stay vigilant, and stay safe.