WEEX: How Newbies Can Prevent Rug Pulls, OTC, Fake Airdrops, and Exchange Scams
All methods of making money through investment are actually very boring and tedious; they merely involve finding a safe and reliable trading platform, finding a trading strategy that suits you, continuously adjusting and correcting the strategy until you can achieve stable profits, then buying - selling - buying - selling... constantly repeating this operation.
There is a saying in the investment circle: do you want to earn money in a boring way or lose money in an exciting way? Usually, some exciting stories are mostly about losing money because they are likely carefully designed and packaged by scam groups.
The biggest feature of cryptocurrency is decentralization; it does not rely on any centralized platforms or regulatory intermediaries, and all data is publicly available on the blockchain and difficult to tamper with. However, this advantage is also a disadvantage, as on-chain activities cannot be regulated, making newcomers in the crypto space, due to lack of knowledge and experience, highly likely targets for scam groups.
This article will introduce four common cryptocurrency scam traps and provide four suggestions for newcomers in the crypto space on how to avoid cryptocurrency scams and ensure fund safety.
Common scam tactics in the crypto space
1) Fake exchanges, spoof websites
The WEEX exchange frequently receives user reports of scams involving fake WEEX trading platforms. Therefore, WEEX has issued multiple fraud risk alerts and created a dedicated page for spoof scam websites, listing over 40 fishy WEEX exchanges, but new imitation platforms continue to emerge, resulting in ongoing scams.
When choosing a trading platform, you can search through authoritative third-party information websites like CMC, Coingecko, and Noname. If the exchange you encounter is not listed on these sites, or if it is listed but ranks very low with incomplete information, it indicates that its trading volume is very limited and it is likely a fake exchange.
The scam tactics of fake exchanges are similar to traditional dating app scams; they will add you as a friend through various communities like Telegram, Line, Wechat, Discord, and first establish initial trust with friendly conversations. Then, they 'accidentally' reveal some investment information or 'wealth codes' to you and flaunt their profit screenshots to attract you to register and deposit. However, these are often platforms where you can only deposit and not withdraw.
Especially when a trading platform's website or app has a very simple UI design, or uses WeChat, Telegram, or Line as the official customer service communication method, you need to be particularly cautious. Generally, well-known exchanges have a large user base, and using instant messaging tools like Telegram for communication would be too overwhelming; they can only choose professional customer service systems like Zendesk or use email for communication.
Some scam platforms may initially allow you to withdraw funds, letting you earn a little money and taste success. But when you transfer in more funds, they will take everything at once. This is called "fattening the pig before slaughtering."
If the other party presents various strange reasons to prevent you from withdrawing funds, be extra cautious. At this point, you should acknowledge that you have entered a fake exchange, consider the funds you previously transferred as tuition fees, and do not harbor any delusions thinking that meeting their conditions might lead to a successful withdrawal. Think about it: would a wolf let go of prey it has caught?
For scams involving fake exchanges, you should not harbor any fantasies from the beginning, as any exchange is just a trading platform. No exchange can help you make money; only your investment insight and trading strategy can help you earn.
2) Airdrop Scam
Airdrop (Airdrop / Giveaway) is the most common marketing tool in the early stages of a project, mainly aimed at attracting users to join, increasing project popularity and community awareness, in order to attract more users to learn about and use the project tokens.
Generally, airdrops require users to connect their wallets to claim them. However, scam groups often guide you to install a fake wallet and ask you to transfer funds into it. Some scams involve creating a fake airdrop claim website that mimics a well-known project, then reminding you to claim a certain token's airdrop through Telegram or private messages. When you connect your wallet to claim, you authorize the wallet permissions to the scammer, who will then transfer all the funds from your wallet.
Let me share a friend's personal experience. He is an experienced player in on-chain operations and is usually very cautious, avoiding suspicious links. However, recently his wallet was completely drained, and over 6 million yuan he had accumulated over the years in the crypto space was stolen. It turned out that he had clicked on some unknown links 6 or 7 years ago, which led to his wallet being authorized to the scam group. At that time, he was still a novice in the crypto space, lacked strong risk prevention awareness, and had no assets in the wallet, so he didn't pay attention. But in the last two years, he has been playing with inscriptions and meme coins more frequently and believed his wallet security measures were sufficient, so he moved all his major assets to a hot wallet. To make things easier, he didn’t register a new wallet or separate his assets into different wallets, leading to today’s tragedy.
Therefore, it is recommended that friends playing on-chain should register multiple wallets, store funds separately, and when claiming airdrops or interacting with meme coins, use new wallets that only hold a small amount as Gas fees. Do not risk your main wallet for the sake of saving a few dollars in transfer costs.
Additionally, everyone can use some wallet authorization checking tools to examine whether your wallet has risky authorizations and cancel those that are not frequently used or trusted.
3) Project Team Rug Pull
Rug Pull generally refers to a project team suddenly abandoning the project and running away with investors' funds.
A well-known case of a Rug Pull scam is the SQUID token. With the popularity of the Squid Game series, the gaming platform Squid Game launched a game of the same name and issued the SQUID token. Players must hold SQUID tokens to participate in the game. SQUID surged over 700 times in just three days. However, due to a hacker attack, the project team simply abandoned the project, suspected of running away with the funds, leading to a collapse in the token price, which instantly went to zero.
4) OTC Coin Buying Scam
The most common situation is when we buy and sell U with fiat currency, often encountering situations where money is transferred but U is not received, or U is transferred but money is not received, and it’s even possible to buy fake U. Therefore, it is recommended that when buying and selling U, you must use the OTC market of well-known exchanges, as the platform will conduct prior audits, eliminating suspicious U traders, and as a third-party intermediary, the exchange will only release tokens to the other party once the payment is confirmed.
In addition, OTC trading also has the risk of potentially receiving illegal funds from the other party, which may lead to your bank card being frozen. Therefore, many U traders now require buyers to provide bank transaction records from the past week before trading. Ordinary investors, due to insufficient experience, may not be able to judge whether the other party's funds are clean and compliant when selling U. The suggestion here is to choose OTC platforms with high credibility and many historical trading records, and conduct small batch transactions. At the same time, try to use empty cards with no funds to receive money, and immediately withdraw or transfer the money to other bank cards. Never choose a merchant with a low exchange rate to buy U just to save costs, or a merchant with a high exchange rate to sell U; remember, "strange situations often have unusual explanations."
How to Avoid Cryptocurrency Scams?
The above are the four most common cryptocurrency scam tactics. So how can we prevent them?
1) Don't blindly follow trends; don't invest in things you don't understand. Buffett says you will never earn money beyond your understanding. Therefore, it is necessary to learn more and understand cryptocurrency knowledge to improve your awareness.
2) Store funds separately in different wallets; only keep a small amount of funds as Gas fees in wallets frequently used for on-chain interactions. Remember, there is no free lunch in this world. Even free airdrops require you to complete tasks or interactions to earn points; no project will give airdrops for no reason, so do not trust any private messages telling you to claim airdrops.
3) Choose trustworthy exchanges. No matter how high your investment level is, how low the fees are, or how accurate the investment options are, if your money is placed in the wrong place, you will ultimately lose everything. Therefore, it is crucial to filter exchanges before deciding to deposit funds. For this, you can refer to the article (How to Judge the Security of Cryptocurrency Exchanges: Four Standards to Avoid Scams).
4) Better to miss out than to make a mistake. If you feel that a project or platform is suspicious, no matter how enticing their claims are, do not rashly participate. Investment opportunities in the crypto space arise daily; missing out may only result in a bit less profit, but if you fall into a scam project or platform, you will lose all your principal!
