More than 1.3 million Brazilians invest in cryptocurrencies, according to the Federal Revenue. However, these numbers also draw the attention of criminals, who have started creating different fraud schemes for profit. In this sense, ESET, with its proactive threat detection policy, explains what is Exit Scam, which occurs when scammers disappear with investors’ money.
It all starts with the creation of an investment fund or an Initial Coin Offering (ICO), which is an initial offer to attract investors for a new project. The objective is to quickly capture the attention of investors until the fund reaches a certain number of assets. Then, Suddenly criminals close operations and disappear from the network with the money.
What is sought in this type of scam is to create a fake crypto asset project with some characteristic that makes it attractive in the market, such as For example, high profitability.. In this way, the scammers try to convey confidence so that people decide to invest in the project, but what they do not know is that the real intention is to steal all the money from investors, leaving no traces to identify them.
Some known cases of Exit Scam are:
Bitker Exit Scam: in 2019, a Brazilian businessman lost R$272 thousand in Bitcoin after investing in an Asian exchange called Bitker. Unexpectedly, the exchange announced the closure of its operations claiming to have been hacked and the investor was unable to withdraw the cryptocurrencies.
Confido Exit Scam: Confido was an alleged blockchain-based application for making payments and tracking money transfers. The masterminds behind the startup released tokens for sale via an initial investment offering (ICO) and promised that for each token invested in the project, people would receive 1 ETH. Thus, Those responsible for this alleged company collected approximately USD 374,000 in two days. So they closed their social media accounts, took down the site, and disappeared with the money..
ESET shares some recommendations to take into account when investing in these funds and knowing how to detect an Exit Scam:
Exorbitant returns: The most common way to persuade investors is by offering high yields: large returns in the short term. However, if it’s too good to be true, it’s probably a scam.
research the project: It is important to investigate the team behind a project. For example, do a search their LinkedIn profiles to see any inconsistencies.
Evaluate the working model: see how the working model is going and why it promises high profitability. Is there documentation that can be consulted? Find out if this is a model that makes sense or if it is just a basic model.
Read the White Paper: Every cryptoactive project usually has a White Paper (white paper) that explains in detail the layout and design of cryptocurrencies. In addition, these documents usually include a projection that guarantees that the business model will generate more income.. Materials that are inconsistent and do not provide a good theoretical framework are likely to be fraud.
Offers and advertising: In general, cybercriminals who set up these types of scams know that in order to attract many investors advertising is needed and that is why they invest a lot in it. In some cases, they even pay influencers to promote their mutual fund.. That is why it is so important to first doubt and then be cautious and analyze each of the points mentioned.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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