Against the backdrop of increasing crypto scams, Crypto exchange Binance explained how to avoid cryptocurrency scams via a blog post on March 6.
Unfortunately they exist, but there are steps you can take to reduce your risk of becoming a victim.
Read on to understand how the common mechanism behind an investment scam works.https://t.co/gUs3fAXyAT
— Binance (@binance) March 6, 2023
Binance disclosed that fake investment scams often hide under the guise of high returns to bait victims into parting with their money. It revealed that scammers hide under these four key variables: find, gain trust, induce, and close.
However, the exchange stressed further that scammers often find potential targets on social media platforms such as Facebook, Twitter, and Instagram under the pretense of being an investment manager.
Thereafter, they tried to gain trust of unsuspecting victims by offering free investment advise, investment success stories, testimonials, and unreliable earnings reports.
Binance identified that scammers create an aura of friendship and association before inducing their potential victims having created a medium of trust. Thereafter, they close the deal and defraud victims of their hard-earned money.
In order to avoid being a victim, Binance urged users to always do individual research such as reviewing and understanding the whitepaper of any project before considering it for investment.
In the same veins, individuals were urged to beware of high returns because no financial investment can guarantee future returns.
According to Binance:
“Anything that promises you guaranteed returns is a red flag. Particularly, pay close attention to statements like “earn 3% per day.” Don’t be tricked by a low number that could sound legitimate: 3% per day is the same as 1095% per year – which is an implausible return on investment.
In the final analysis, both retail and institutional investors are also urged to protect and secure their personal details.
Binance Partners With Law Enforcement Agencies on Anti-Scam Campaign
Sequel to its commitment to get rid of scams within the crypto ecosystem, Binance has launched the Joint Anti-Scam Campaign in partnership with law enforcement agencies across the world.
Binance Partners With Law Enforcement Agencies to Launch Joint Anti-Scam Campaign | Binance Blog https://t.co/t3P78R0B6L
— CZ 🔶 Binance (@cz_binance) March 5, 2023
According to Binance, the partnership started in Hong Kong in an attempt to work with local police forces towards crime prevention within the crypto space.
While the partnership has started yielding results, more alliances should be made in order to restore security to the ecosystem.
Recall that more than $3 billion were lost to hackers in 2022 according to data released by Blockchain security firm Peckshield.