- Cryptocurrency scams are on the rise globally.
- Influencers and celebrities are at the front of the scam game hitting the digital asset world.
- Governments and Financial Regulatory Bodies are implementing tighter measures as a result of the growing negative trend.
- Large-scale scams by celebrities make cryptocurrency buyers scared to invest more.
Just as in every other industry, cryptocurrencies and digital assets are also susceptible to fraud. Experts have always warned about potential cryptocurrency scams. Most of these scams are usually done with altcoins in the popular pump and dump manner.
Before the launch of most altcoins, especially the newer ones, celebrities and influencers are used to create some sort of hype around the coins and to get their fans to network around the coin.
At launch, people invest in the coins and initial investors liquidate their holdings thereby leading to a price crash and sudden losses. These scams make the value of the coins and tokens worthless. Other scams occur where scammers sell fake NFTs.
Top Controversies and Scams Involving Influencers
The majority of the following controversies are highly suspicious cases, labelled by users as fraudulent.
1. Refinable Controversy
Popular YouTube star, MrBeast was the influencer at the centre of the “Refinable Controversy”. Launched on Binance, Refinable is an NFT solution that lets users buy cryptocurrencies with its token. MrBeast is linked to the advertisement of the brand.
After the sale, users have said that they can’t sell the coins. Not only that, the price of Refinable was higher than advertised; it was meant to launch at $0.33 but launched at $4 with the price rising to $9 before falling to $2.
2. The Crypto Queen Scam
The popular OneCoin scam that exploded into the scene in the UK made people lose millions of dollars. Businesswoman Ruja Ignatova fondly called the “crypto queen” spoke about a mystery cryptocurrency that would rival bitcoin at Wembley Arena. Soon after, OneCoin exploded and a few years later, she disappeared causing investors to lose millions.
3. Safemoon Pyramid Scheme
Many experts feel the Safemoon token is a pyramid scheme because of events surrounding it. Weeks after launching, Safemoon boomed and investors were sitting on an insane amount of profit. While other sites reduce transaction fees, Safemoon hiked its transaction fees to 12%. As a result, Safemoon burned half of its tokens, redistributing the other half in a bid to encourage people to hold on to the coin. Safemoon was also pushed by influencers.
On the Flipside
- While experts and authorities are warning investors about these scams, they may not go away anytime soon, as con men always devise new ways to cheat people.
- These scams are on the rise; however, there are ways of avoiding them
- More influencers may also be involved but are unaware they are promoting scams as they just want to get paid.
4. Jay Mazini Bitcoin Scam
Popular Instagram influencer Jegara Igabara popularly known as Jay Mazini stole Bitcoin from his followers by deceiving them that he gives 5% over the market rate. He also showed himself giving cash and gift cards on the fake Instagram page.
The Effect of Scams on the Crypto Industry
Digital assets suffer when news of a scam breaks out. People who should have invested in cryptocurrencies are afraid to do so in order not to lose their money. This slows down the growth of these assets and affects market capitalization.
Furthermore, these scams make governments more offensive against cryptocurrencies and they ban exchanges to promote Centralized Finance, while hiding under the guise of protection and not wanting people to lose money.