Crypto Academy / Season 3 / Week 5 - Homework Post for [@yohan2on] Crypto Scams and how to avoid them

Hello professor @yohan2on, I really enjoyed your lecture on crypto scams and how to avoid them. This is a very interesting topic, I'm happy to partake in your homework task. I hope you like it.

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1.What are Crypto scams? Make your research on any Cryptocurrency scam. (Attach a few references to the news surrounding that scam crypto project)

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Crypto Scams

Crypto scam is a generic term given to any deceptive or fraudulent means by which one uses to earn or gain crypto assets from unsuspecting people. This is usually done by an organized group and can be executed in various ways. As a result, it is imperative that traders and investors in the crypto space be alert in order to avoid them. Typical victims of crypto scams are newbies and traders or investors who are in a sense greedy or expect great returns from an investment. Scammers usually aim to get the wallet addresses of users or use deceptive and persuasive means to get people to send them funds. We'll look at these in detail later on.

As with everything else, the negatives tend to travel faster and cause fear and sometimes panic in the hearts of others and this is not lost on the cryptocurrency world. These have helped slow down the adoption of cryptocurrencies in many areas as well as cause doubt in the minds of the masses. Even in Ghana, most people view cryptocurrencies as a fraudulent act just because of crypto scams.

The best way to help curb this menace is to create awareness of these scams and some are listed down below:

• Imposter Sites
  One common method by which scammers operate is by using phishing sites/imposter sites to collect users information and this includes the wallet address as mentioned before. At times users deposit funds to this site thinking it's the original. One might wonder how people fall for this trick nonetheless it's due to our own negligence. Imposter sites are designed to look just like the original with some slight differences or a typo in the name somewhere. These sites usually lack a small lock icon which all current sites have on the right side of the address bar. The address usually has "http" instead of the current "https" and at times you'd see a zero instead of the letter "o". People usually end up on such sites through scam emails claiming to be from the original company. Therefore it pays to be vigilant.
• Fake Apps
  The adoption and use of crypto has caused lots of people to design apps that facilitate our crypto use and needs, scammers have also caught on and are sowing weeds amongst the wheat. Lots of apps on the Google Play Store and even Apple Store are fake apps by scammers designed to steal information from users or their funds. Even though some of these apps are found and taken off, some do manage to succeed in stealing from the user. It's important to research on these apps and check on their reviews before deciding to use them.
• Social Media Scams
  Scammers sometimes hack into the accounts of celebrities and influencers to get the public to join certain activities that involve these people crediting them their tokens. One popular one was an incident that occurred in 2020, where a scammer hacked the Twitter account of Elon Musk and tweeted saying any payment sent to the BTC provided will be doubled.

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  ^source

  I wished I could have joined in as I'm a fan of Elon Musk and was interested in crypto too. But at the time I had no knowledge about crypto so there was nothing I could do. It later turned out to be a scam and that his account had been hacked. It's said that more than $100,00 was sent to that address and I'm grateful to have dodged that bullet. One thing to take note of is that, if you're asked to send tokens, it's a scam.

• Fake ICOs
  Initial Coin Offering, also known as ICO is a method crypto start-ups use to gather funds from the public by letting them purchase their coin before releasing in order to begin their intended project. It worked well and scammers got involved too. The practice was that after some amount of tokens had been bought they'd sell it and disappear with their cash leaving the masses with useless tokens. This is termed a rug pull. One of such was the Plexcoin ICO and they made away with $15,000,000. Before intending to partake in an ICO, be sure to do enough research on it and get to know certain things like the aim of the coin(project) and be sure to read their whitepaper as well. Also, a better called IDO has been introduced and has been proven to be much safer and reliable than ICO and it'd help to reduce the risk of being scammed.

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AfriCrypt

^source

Africrypt is an investment firm in South Africa founded by two brothers Ameer Cajee and Raees Cajee. Their business claimed to use AI to make an AI-driven cryptocurrency fund to help people achieve financial freedom and invest on their behalf with their AI and users would get monthly reports on how their account is doing. So all people had to do was sign up and deposit their Bitcoin as part of their agreement however, they are exonerated from any hacking whatsoever. Obviously with such sweet and tempting offers, people got involved and 69,000BTC or equivalent at the time 67 million South African Rands or 4.6 USD was lost. This case is such that launching a formal investigation wouldn't really help as Bitcoin is not considered a legally financial product plus it is also harder to trace since it's on a decentralized network.

In April of 2021, they sent emails to their investors claiming the company had been hacked and this impacted the accounts and wallets. Ameer Cajee told the investors not to report this to the authorities since that would just slow the recovery process. They later fled after selling a Lamborghini, a Ferrari and two properties they owned.

They had a YouTube account and currently, there's just one video available. The site they provided too is clearly not safe and even for sale now.

^source

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My Personal Experience

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I want to add a personal experience that relates to this, I met a guy on a Discord server. Let's call him Andre. He sent me a text privately asking if I was into crypto. At had no knowledge of it whatsoever at the time even though I had a Flashcoin wallet but I was eager to learn. So I made him know and he gave a general idea of how crypto works. He later told me that a friend of his showed him this trick where instead of reading charts and articles to know the crypto market you'd just invest in a company and the company would work with it then give you interest as they are professionals. Thus, I was introduced to greenplantin.com.

^{Screenshot from Discord}

I immediately registered but had no coins to put in.

^{Screenshot from Discord}

And whenever we talked he'd keep talking about it. I got to know a friend in class who was dealing in crypto at the time so I got him to help me get some. I managed to buy 0.00021427 BTC at 70 Ghana Cedis at the time but it wasn't enough to start the investment.
We used to talk but then he'd always move back to me getting into greenplantin as it would make everything easier, at that point, I began to doubt so I did some research.

^{Screenshot from Discord}

I couldn't find any mention of greenplantin anywhere not even on Reddit save for two sites in the google search. The first was the site itself and the second was a comment someone made saying greenplantin was a scam.
Immediately I stopped communication with him and was thankful for having dodged another bullet.
Initially, he still tried to talk but now he's no longer active. And the site is nowhere to be seen now too. It pays to be vigilant and not just follow the sweet promises of people.

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2.To what extent have Crypto scams affected the Crypto space?

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How Crypto Scams have affected the Crypto Space

With lots of people being victims of crypto scams, and lots of funds stolen and plans and dreams shattered, it's clearly seen that crypto scams have had a great impact on the crypto space. As I said before, the name of crypto is being tarnished in certain areas and as such, people in such areas who don't have much knowledge on crypto and its benefits tend to be against it. Some see it to be a waste of time and others just label it as a fraudulent business. With all these different perceptions, we realize that it slows down the adoption of cryptocurrency.

Some victims of crypto scams decide not to involve themselves in anything regarding crypto and as a result, we tend to lose investors including potential ones in the crypto space. With the news of people always losing their funds or having it being hacked, this is sure to scare investors.
The stories of crypto scams have caused certain bodies and organizations to ban cryptocurrencies in certain areas. Nigeria has banned all cryptocurrency-related stuff in order to protect its citizens. And I clearly remember that at a point, information went round on radio stations in Ghana advising listeners to stay away from cryptocurrency.

Despite all the opposition, cryptocurrency is still gaining ground slowly and steadily. I believe that if people are educated on cryptocurrencies, their benefits and protective measures, we wouldn't have lots of people falling for scams and spreading false information.

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3.Will regulations in Crypto add value to the Crypto space?

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Will regulations in Crypto add value to the Crypto space?

Regulations help control systems and a whole but in this case, it's quite difficult considering the crypto space is decentralized and as such not owned by any one person. However, models like the Ricardian contract can be applied to blockchain to help enforce and control certain transactions on blockchain networks to help regulate it so no one just does anything they want. For example, if a transaction is going on the network where someone, let's call him Jack must send tokens to Phil, and Phil in turn must also send money to Jack, one might decide to follow through with his side of the agreement, however with the Ricardian contract in place, it'd be no different from having the backing of a law court.

I believe that if systems and models like this are implemented on blockchain networks, no one would do whatever they want. With this, some form of regulation can be implemented.

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Conclusion

Scams are seen in every facet of our life and the crypto space is no exemption. Scammers will try whatever means to get a hold of your wallet information or funds and have their way with them. These have caused massive losses to individuals be it money or their very lives and had given rise to the doubts and rejection of cryptocurrencies. Certain regulations can be put in place to ensure the safety of investors and traders.

Would like to thank @yohan2on for this interesting topic.