If you do not believe that markets should be regulated, you will believe in 1 or 2 years. Dangerous situations in the field of finance have always been ongoing, but many of the old frauds have not been seen in the mainstream system for a long time. Now these scammers are hiding in their corners and trying to continue their existence in the crypto space.
When you see any scheme that might look like these, you need to be clearly awake.
The Most Classic Scam: Ponzi Scheme
Charles Ponzi was an Italian fraud. The method was simple. Promise massive profits to investors, then consume the deposited cash. This basic system is still obsolete, and fraudsters continue to deceive at risk of imprisonment.
Let me see if you see a crypto “project” that offers 10% or more returns per year, understand that it is Ponzi and push it backwards. This system works by paying the capital invested by new investors to the old investors and needs a constantly growing pool of investors to continue. Profit does not come from anything as challenging as a business, they come directly from the wallets of the people who entered last. The scheme crashes when it cannot find new money. But most often the criminal behind the scheme chooses to escape when he begins to feel the clear collapse.
This is another indicator when the Ponzi scheme encourages older investors to find new investors, but the test is still simple. If the scheme offers significantly higher returns or profits than you can get from a trusted brand, this is a deception and possibly a Ponzi scheme.
This is especially a problem among small exchanges in the crypto space and is common in ICOs. Exchanges buy coins and allow you to trade with them.
Stock market wallets may have been hacked, they have lost money by mistake or sold the money to pay; however, the result is the same. You get an error page and you say goodbye to your crypto money. Now, it is hoped that this problem will be solved with the (KYC) customer recognition system.
What shall we do?
Do not keep large cryptocurrency balances on exchanges. Remove your coins regularly and put them on the blockchain in an out-of-stock wallet. Avoid all exchanges that do not pay quickly and cannot be contacted.
Basically, never trust any stock market because they are like banks. Stock exchanges are basically banks, in fact, they only work with part of the trade that revolves around the blockchain. When you trade with Bitcoin (BTC) for Litecoin (LTC), an accounting system tells you your previous balance and your current balance. This is what actually happened.