Falling for a crypto scam might seem like something "other" people would fall for. Certainly not you, you're too clever and smart (and pretty). You would never be that dumb.

If that is what you are thinking, then congratulations. Most people who have ever gotten scammed think the same thing.

Falling for a crypto scam can happen to anyone no matter how smart or clever you are. The best way to protect yourself is to understand how these crypto scams operate so you won't fall for them.

Chances are either you or someone you know has fallen for a "rug-pull", "pump and dump", or "ponzi/pyramid scheme". With regulation having little to no effect on these crypto scams, they will only become more prevalent, vicious, and costly.

In this guide I'll actually teach you how to make a crypto scam. Then you'll know what to look out for and how to avoid getting scammed yourself.

Each of the three main crypto scams have a different structure and methodology. I'll teach you about each of the three separate scams.

Rug Pull

One day as you are scrolling through countless crypto projects, you come to the realisation that most projects are built off of hype and speculation. After-all , so many of them don't have real-world testable products. Only promises and "proofs of concept".  (Being a scammer) you realize that you can hire a small team off fiverr to make a nice website and social meidia accounts that make wild promises.

Next, you create a whitepaper (document explaining the project) and a Token to "help investors get in early". You promise an incredible solution. Maybe it's a web3 crypto video game with blockchain technology for the metaverse (the more buzzwords the better, it makes you seem smart to crypto noobs).

Slowly, you build up a community that really believes in the project (or at least they believe they can make money). Eventually you scrape together just enough money to purchase a celebrity endorsement. Once they make the announcement a surge of new people start buying up the token.

All the new buyers cause the price to jump higher and higher. This provides you the ultimate opportunity to sell all your tokens to these unsuspecting investors.

How to avoid this scam

- Verify that the team has some experience in the field

- Don't invest simply because a celebrity or friend tells you about it

- Read the whitepaper. Does it talk about actual technology or is the entire thing buzzwords

Pump and Dump

Pump and dumps are common in traditional finance as well as the crypto world. The difference is that in crypto, pump and dump schemes are a lot more open about it than in traditional finance

Say you want to make money pumping a dumping, you create a telegram group or discord server and let everyone know that you are doing a pump and dump. Make sure to let them know how honest you are, and how you are tricking all those other unsuspecting crypto holders.

Once you are building a community, now its time to find a good coin. You want a coin or token that is relatively new with a small market cap (total value). This is because the cheaper the token the easier it is to manipulate.

Your whole goal is to get people to believe that the token is getting traction, and then when the frenzy has reached its peak, you sell and then tell everyone else in your community to sell. But by then it's too late, so you say something along the lines of, "too slow, better luck next time". Even though you engineered this to happen the whole time.

The best part is, people believe it. So you can keep doing this again and again and again with the same community.

How to avoid this scam

- Don't join pump and dump communities

- When a token is going up, find out if its because of fundamental growth or completely random

- Have a proper strategy when investing in crypto. This helps you hold when the price goes down and sell when it goes up.

Pyramid Scheme

Another classic scam brought over to the crypto world is the Pyramid or ponzi scheme. The premise is basic.

You advertise ridiculous returns on investment. Get a couple people to send you small amounts of money. Then give them exactly what was promised (by giving them your own money of course). Once they see it works, they give you everything and start telling their friends. Now you give them the previous investors money. This cycle keeps growing and growing until either you run out of people, are discovered, or simply take the money and run away. There are ponzi schemes all around us, but the crypto ponzi schemes have a twist. See they don't just promise crazy returns (they do). They back it up with buzzwords and jargon. This confuses new investors who only hear stories of people making crazy amounts of money off crypto. So even though normally, no rational investor would even touch something that promises 1% weekly returns. However, because of the "magic" of crypto he believes in it.

A common way to mask your ponzi scheme is by saying it is a "new trading AI trading bot" or that you have "cracked the code on making money".  

How to avoid this scam

- Be very careful on any projects, trading bot, or person that is promising low-risk high returns

- On any project you come across, understand how it works. Ponzi schemes will try to obscure this

- High returns and high risk are (almost always) closely correlated, if someone promises you good returns at no risk, they are lying