- Cryptocurrency is less regulated than other assets, which can lead to scams, fraud, and financial ruin.
- There are various forms of crypto market manipulation, including pump-and-dump schemes and rug pulls.
- Investors can avoid several common crypto scams by performing thorough due diligence before trading.
A cryptocurrency is a digital token that can be exchanged for goods and services. But many retail investors and institutions treat cryptos as investments instead of means of exchange, buying certain coins and hoping to sell them for a profit at a later date.
But investors must be careful before dabbling in these widely misunderstood assets.
Cryptocurrencies are speculative by nature. They lack traditional fundamentals that investors can analyze and assign value to. As a result, cryptos tend to be volatile assets — their prices can drastically fluctuate on any given day. Crypto markets are also less regulated in general, so it’s easier for bad actors to maliciously influence prices and take advantage of unsuspecting investors.
For these reasons, investors should be wary of the following crypto scams before they start investing in crypto.
1. Market manipulation
Market manipulation is the deliberate attempt to artificially influence or interfere with asset prices. Typically, scammers manipulate markets to tip the…
