Key Takeaways
- Investors new to crypto are more susceptible to scams. Staying up to date with the latest forms of fraud and manipulation is important to avoid financial loss.
- Following a set of simple due diligence routines will help users distinguish bad projects from legitimate ones.
- Phemex, a well established cryptocurrency exchange, periodically reviews its listed assets to make sure users are protected from rug pulls or exit scams.
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The crypto industry is known for continuously innovating. Projects come up with different ways of solving real-world problems. Quite often, these solutions attain a level of complexity that can be confusing to the average user.
Don’t Be Left Holding the Bag
Scammers are also coming up with more sophisticated schemes to take advantage of the less experienced, from traditional price manipulation to inserting bugs in applications that manage and store digital assets.
In crypto, a classic way of tricking users is through what is commonly known as a “rug pull,” a scheme through which scammers create a new coin and promote it aggressively, relying on fake or exaggerated claims.
The intention is to increase the token’s price by promising easy gains. Scammers are careful enough to generate fictitious trading volume during a set period of time and give the impression that the project is sustainable in the long run (a factor that differentiates a rug pull from a “pump and dump.“)
When the project becomes…
