Every year, people lose enormous sums of money due to fraudsters who exploit people's trust, profiting from their desire to get rich quickly.
The best way to protect yourself from fraudsters is to always be vigilant. First of all, familiarize yourself with the types of fraud involving securities or cryptocurrency. This knowledge will help you recognize the first signs that a fraudster is at work, allowing you to avoid unnecessary expenses and losses.
When making investments, it's crucial to understand their legality. Professional honest workers always allow you to ask many questions and give clear and concise answers, which helps to consider risks more carefully. Fraudsters, on the other hand, want you to take their word for it without fully explaining the issue or discussing the investments involved and their outcomes.
How to Recognize Shadow Investment Schemes
There are several signs:
- Promises of astronomical returns; no financial investment can be based on super-fast profits, although it sounds too tempting to be true information.
- Sales under high psychological pressure; such offers can be very dangerous (when there is an offer for an instant deal, claiming the deal is valid right now or within 15 minutes). Promoters offer a feature designed to prevent you from thinking and carelessly investing money and losing it.
- Vague answers and empty promises. It's beneficial for fraudsters if investors don't know the topic and don't ask extra questions. Instead, you will receive questions aimed at getting a quick response to fast actions.
- Convincing promises of no risk or minimal risk guarantees the return of investments and even profits - this is a sign of deception.
- Promises of gifts, discounts, or certificates if the investor agrees to invest money in a dubious business they are unaware of.
Fraud schemes in investments are gaining momentum in the modern world.
Cryptocurrency fraud:
Phishing - this type of scheme allows access to private information stored in electronic wallets, including their details and keys. By receiving suspicious links and clicking on them, you can lose your data containing private information. Fraudsters successfully exploit this.
Fake ICO method involves an investor investing their initial capital and becoming a victim. They are offered a fake project where everything is fabricated (documents, business plan, information about developers and employees). For this, advertising is used. Checking investment offers for honesty in this scheme is impossible.
Ponzi scheme - today, this is the most common fraud in the field of cryptocurrency. The goal of this fraudsters' project is to mislead the potential investor victim. Fraudsters promise high returns and guarantee payments from new investors. It resembles a pyramid.
Pump and dump. This type of fraud involves deliberately false information about high prices for cryptocurrency. Once the purchase occurs, their price drops sharply, and investors are left with nothing.
Social engineering - this type of fraud resembles psychological pressure through advertising on social networks, and messenger messages are fake. Aggressive messages are sent aimed at enticing the client to click on a link where malware will steal personal data.
Fake Investment Offers:
- High percentage with guaranteed income;
- Aggressive marketing;
- Lack of any work permits or licenses;
- No office;
- No legal registration in the country where the investments are made;
- No investor accreditation;
- Non-provision of signed documents;
- Identities and biographical details of managers are closed;
- Insistence on involving relatives and friends.
Signs of a fraudulent investment scheme resemble a pyramid scheme.
A pyramid scheme is a system that ensures profit for many members of a certain structure, thanks to constantly incoming investments or some money, and each previous participant receives income because subsequent ones join and make investments. By and large, the source of income is hidden, and such concealment and substitution are fraud.