In the rapidly growing crypto sector, there are massive opportunities for the common masses. Nonetheless, at the same time, it is equally important to avoid a cryptocurrency scam amid the unprecedented advancement in the techniques used by malicious actors to fool unsuspecting investors. Particularly, fake crypto tokens are now being majorly leveraged to drain the hard-earned money of the investors, highlighting the requirement for proper guidance for the beginners to prevent such events.
What Are Fake Crypto Tokens?
Fake crypto tokens or scam tokens denote counterfeit crypto assets that are created to defraud investors. Such tokens often appear as legitimate crypto projects, imitating the real coins to leverage their publicity. Nonetheless, the beginner investors, unable to recognize the difference between the real and the counterfeit tokens, invest in these fake tokens. As a result of this, they lose their money and, many a time, their sensitive personal data.
A dangerous characteristic of these scams is that they convincingly imitate the real projects. For this purpose, they target the victims via similar logos, names, and fake social media pages and websites. Moreover, scammers carry out fake pre-sales, proposing huge growth of their projects following listing. The popular social media platforms utilized by these scammers include Telegram, WeChat, and WhatsApp. The respective crypto scams take into account exit scams, rug pulls, pump and dump scams, fake giveaways and airdrops, fake token sales and initial coin offerings (ICOs), as well as launchpool scams.
Pump and Dump Scams
Pump and dump scams take into account artificial inflation of a fake crypto token’s price by the scammers. In this respect, the scammers may conduct coordinated buying to pump the fake token, attracting investors to make notable investments. However, after collecting the capital coming from the investor, the scammers offload or dump their token holdings. This leads to huge losses for investors.
Fake Crypto Token Sales or Initial Coin Offerings (ICOs)
Crypto scammers may conduct fake token sales or ICOs, tricking victims into investing by promising rapid gains. However, after collecting funds from targets, the scammers disappear via an exit scam while investors are left with tokens having no worth at all.
Giveaways and Airdrops
Fake crypto tokens also include giveaways, involving token airdrops to attract numerous investors. Nevertheless, in return, they ask the targets to pay charges or share their personal details. By securing the sensitive information, the scammers can conduct phishing attacks or identity theft, posing substantial harm to investors.
Launchpool Scams
Some of the crypto scammers even exploit key platform announcements. Hence, at the promotion of a real token, scammers develop lookalike tokens to conduct impersonation scams by using fake channels. However, victims think they’re purchasing a real project at a decreased price, only to get swindled.
Real World Fake Crypto Token Scams
One of the key scams dealing with a fake crypto token was the $OMNI token project. Following the announcement of the real $OMNI token on Binance, scammers rushed to defraud victims by quickly launching a fake version via some Turkish groups on Telegram. Thus, the fake crypto token possessed zero liquidity as well as just a few holders, clearly indicating a scam.
Similarly, back in July last year, the “BOOM” token emerged with more than 11M investors while its liquidity comprised only $3,380. This liquidity was wholly provided by the creator of the project. Moreover, it had a key red flag, including hundred percent sell tax. Due to this, anyone endeavoring to sell the token would get nothing. This underscored a noteworthy rug pull instance, draining all of the investors’ funds.
Identifying and Preventing Fake Crypto Token Scams
Keeping in view these tricks conducted by the scammers to loot investors, here are some crypto security tips to detect and prevent such scams:
Validate Contract Address
Cloned websites and fake wallets may deliver counterfeit addresses while endeavoring to mislead the investors. Hence, to identify a fake token, the investors are advised to always verify the contract address by visiting the official sources such as CoinGecko, CoinMarketCap, or the website of the project.
Utilize Advanced Tools for Risk Assessment
Token Sniffer and other such professional platforms can assist in analyzing development activity, liquidity, and contract code of a token. The respective tools are crucial for those who do not possess coding skills, promoting secure crypto practices.
Do Not Use Unofficial Channels
Investors are also encouraged to avoid trusting WhatsApp, WeChat, or Telegram-based offers. Scammers frequently use these social media platforms to disseminate phishing links, fake airdrops, and counterfeit contract addresses.
Be Cautious of Too Good to Be True Returns
Crypto scammers even today use the oldest trick of promising huge profits, as is the case with Ponzi schemes. Therefore, the investors are advised to avoid getting entrapped by FOMO in crypto. Moreover, they should always remain skeptical of a massive hype without concrete substance.
Tips to Follow If You’ve Purchased Fake Token
However, if you’ve already been scammed by a fake token, you should immediately stop trading to prevent additional losses. Apart from that, you should keep record of everything, including chat logs, transaction hashes, and screenshots. Subsequently, you should also reach the exchange to report the details of the scam. Moreover, you should also attempt to recover your funds while staying cautious of scam-based recovery services.
Conclusion
As fake crypto tokens are prevalent nowadays and drain large amounts of funds from the inventors, one should be well aware of the ongoing tricks that scammers use. For this purpose, DYOR (Do Your Own Research), investigating the whitepaper, community activity, and roadmap of a crypto project. Moreover, you also need to use trusted wallets. Along with that, you should also enable effective two-factor authentication (2FA) as well as wallet security to protect your crypto wallet.
Frequently Asked Questions
How can I tell if a crypto token is fake?
Check the token’s contract address using trusted sources like CoinGecko or CoinMarketCap. Also, research the project’s website, social media, and whitepaper for red flags.
What are common signs of a fake token scam?
Watch for unrealistic returns, lack of liquidity, fake airdrops asking for personal info or fees, and contract codes with high sell taxes or suspicious activity.
What should I do if I bought a fake crypto token?
Stop trading immediately, document all evidence including transactions and chats, report to the exchange, and avoid scam recovery services.
