Investment scammers often pose as crypto finance advisors, employees of top financial firms, or even social elites. They pitch projects that supposedly have little to no risk but promise huge returns.
Remember: If a deal sounds too good to be true, it may be a hidden scam. Steer clear from these "investments".
I. The Four Steps of a Scam
1. Sourcing the Target
Scammers usually scout for potential victims on popular social media platforms. Once they have a target in sight, they disguise themselves as investment managers or wealthy individuals. They might "accidentally" send a wrong message to start a conversation with the victim.
In some cases, fake investment scams are harder to spot. Victims might stumble upon social media ads claiming to be from a famous brand or individual. These ads lead to a professional-looking website designed to gain the victim's trust.
2. Gaining Trust
Scammers share stories of their investment successes, "good testimonials" from supposed clients, and fake financial reports to earn their target's trust. Some even chat about personal topics like health and family to build a rapport.
3. Encouraging Investment
Once scammers have gained trust by building a "friendship" or brainwashing their target, they will shift the conversation toward making big money through investments.
They might promote fake investment software filled with bogus prices, profits and currency lists. They even use charts showing upward trends to lure victims into investing their money.
4. Cash Out and Disappear
Just when the victim is thrilled about their "promised" investment returns, they suddenly find they can't access their funds or account in closed. The so-called "investment manager" becomes unresponsive and eventually ghosts them completely.
II. Case Study
User X filled out an online survey about his cryptocurrency habits and received a call from someone claiming to be a financial advisor. Over the next few months, they built up a partnership where the scammer gained User X's trust. The scammer convinced User X to invest in a project that promised a 2% daily return. Tempted by the high returns, User X initially invested 2,000 USDT.
In the following days, User X saw his funds grow quickly. The scammer urged him to invest more. Hooked by the apparent profits, User X invested 100,000 USDT all at once. Soon after, the scammer disappeared and that's when User X realized he'd been scammed.
III. How to Avoid Fake Invesment Scams
1. Do Your Own Research (DYOR)
All legit crypto projects should have a whitepaper that clearly explains how the project works and their tokenomics. If you're invited to invest in a project but the whitepaper is vague or doesn't even exist, consider that a red flag.
Do some digging into the company and its owners, directors and team members. At the very least, look them up online and use common sense to assess their credibility.
Always ask yourself: Does this project have a real team behind it? What problems are they trying to solve? Is there a market for this project or product?
2. Don't Be Fooled by Appearance
Just because a website, ad or social media post looks professional doesn't mean the investment is legit. Scammers often impersonate trusted brands (like BingX) or celebrities to make you let your guard down.
3. Be Wary of Promised High Returns
No person, algorithm or project can accurately predict market trends. Be skeptical of any investment that claims to guarantee returns.
4. Avoid Unsolicited Investment Deals
If an investment expert or attractive and single individual reaches out to you out of the blue, it's likely a scam. Professional scammers often contact hundreds or even thousands of people, knowing they only need one person to take the bait. Don't let anyone pressure you into making hasty investment decisions.
5. Protect Your Personal Information
If someone reaches out to discuss investment, ensure to verify their identity through official websites or social media accounts. Remember, never share personal or account information with anyone.
If someone asks for sensitive information like your two-factor authentication (2FA) codes or dynamic passwords, block them immediately.