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Types of cryptocurrency scams you should know before beginning crypto trading

The market scenario for bitcoin is fast altering. The essence of its influence on the fate of transactions has sent the globe into a frenzy, with terms like instability, risk, reward, and loss causing worldwide consternation. Scammers and cheaters have turned their attention to the lucrative cryptocurrency markets as individual investors, speculators, and various investment firms continue to focus on swindling people of their money. As a result, cryptocurrency scams are becoming more popular to dup individuals into paying money, and they come in various shapes and sizes.

Since the number of confirmed crypto frauds is increasing, it’s vital to understand the different types of cryptocurrency scams before you start trading. 

Market Manipulation

The purposeful effort to intentionally influence or tamper with asset prices is known as market manipulation. Fraudsters typically influence markets to quickly shift the balances in their favor and profit. This blanket term encompasses a variety of illegal trading practices, including:

  • Spoofing: This gives the appearance of momentum by placing a fictitious purchase or sell orders that are canceled before they are filled. Scammers regularly use fake accounts and bots to place huge deals, indicating that demand increases or declines.
  • Pushing ahead: This is the activity of trading based on the anticipation of future transactions. Miners and node operators, for example, may have access to pending deals. They might then use their insider knowledge to trade ahead of significant price fluctuations profitably.
  • Churning: This is when a broker engages in excessive trading in a client’s crypto account to make higher commissions. For managing crypto holdings, asset management firms may be paid. As a result, unscrupulous brokers could take advantage of a commission-based payment structure to profit from unwitting clients. Churning may result in unjustified costs and unneeded tax liabilities for the affected individuals.

A beginner should trade with recognized exchange platforms that have solid security standards and internal controls. Moreover, before making any financial decisions, investors can protect themselves against illegal practices in the crypto markets by extensively studying coins, brokers, and exchanges.

Pumping and Dumping schemes

The attempt of an individual or a group to artificially increase the price of an asset so that they can profitably liquidate their interests is called the pump and dump scheme.

The “pump” is the initial step. Scammers utilize social media, forums, and online communities to spread false or misleading information on undervalued currencies in order to convince people to invest. These posts frequently make promises of a coming surge. After that, there’s the dump. Due to increased momentum, other investors pay in as the price rises, driving the price higher while the swindlers cash out and make a quick profit. When investors discover the buzz is bogus, they scramble to limit their losses, and the currency’s price drops.

Rug pull

When crypto creators leave a project but pocket the funds obtained from investors, this is known as a rug pull. To attract investors, corrupt individuals can issue a new token on a decentralized exchange, couple it with a real cryptocurrency, and generate buzz on social media. The developers scrap the project and flee with funds once enough money has flowed into their token.

Keep a eye on the websites and third-party partners involved. No matter what people say or how many excellent evaluations there are, don’t rely on remarks from strangers on social media. If you can’t discover any credible reviews, you’re more likely to be dealing with a scam.

Hacking and thefts

In comparison to traditional asset markets, crypto markets have specific distinct characteristics. However, traditional frauds such as account hacking and identity theft continue to be a threat to investors.

Investors will require a crypto wallet to trade cryptocurrency, which can be a digital or physical device. These wallets contain both public and private keys. The former is a public address that can be used to deposit cryptocurrency into a wallet, similar to just how routing and bank account numbers can be used to make direct deposits. The latter is similar to a net banking platform’s password. The funds in the account can be controlled by whoever has access to the password.

Keep your private keys in a safe location, just as you wouldn’t disclose your credit card details to a stranger. Scam artists can use this data to breach accounts and make withdrawals, and they’ll use various techniques to entice investors to give their personal information. And if suppose you lose your money to a scam, cryptocurrency scam recovery experts will recover your money with the help of their elite personnel consisting of lawyers, cops, and financial experts.  


An initial coin offering (ICO) is the digital version of a stock’s first public offering (IPO). An ICO is a method of raising cash for a crypto project, such as a token, software, or related service. The donor receives a supply of coins in return for contributing funds.

While IPOs are traditionally reserved for well-established private enterprises, companies that pursue ICOs aren’t in the same boat. They could be brand-new businesses with no track record, making it impossible to distinguish between a legitimate service and a scam. Like rug pulls, ICO scams take money from early investors to quit the project soon after.


As a beginner in cryptocurrency trading, you as an investor must understand its hazards. Such as types of crypto scams and ways to identify and avoid fraud. The scammers will employ numerous methods to lure you in. Therefore, you must stay alert and not fall for their practices and save yourself from financial misfortune. 

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