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due to the nature of the cryptocurrency industry, many scams
operate. Hype, technical complexity, regulatory uncertainty, and naïve
investors hoping to make a quick buck all make for an environment ripe
for fraudsters. Some popular scams are: • Ponzi schemes: Investors are
promised good returns and old investors are paid with new investors’
• Exit scams: Founders of a project, wallet, exchange or investment
scheme run off with customer money.
• Fake hacks: Project gets hacked by an associate who shares profit
with the project team.
• Pump & Dumps: Illiquid coins are bought cheaply by fraudsters then
hyped on social media and sold at a higher price to new investors.
• Scam ICOs: ICO raises money with no intention of delivering a
product. Sometimes they will list well known industry experts as
advisors or as part of the team to get credibility, without the
knowledge or approval of the expert.
• Spoof ICOs: Clones of real ICO websites made with the scammer’s
deposit address instead of the legitimate deposit address.
• Scam mining schemes: Claims that investors will earn lots of
cryptocurrency but key information such as difficulty increases is not
• Fake wallets: Wallet software that allows the scammer to access
private keys, so the coins can be stolen from the user.
And so on. There are many variations to these, and scammers are proving
increasingly innovative!
I hope this chapter has given you some food for thought. People have
made and lost fortunes trading cryptocurrencies and investing in ICOs,
but there are many risks. If you do decide to get involved, be careful and
do a lot of research before committing your money.

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