David Schwartz, the CTO of blockchain company Ripple, has shared some useful tips about how to spot a cryptocurrency scam on Twitter.
Contrary to what some naive people believe, no one is going to provide them with “unusually high” returns by investing their money.
If someone were to find an amazing way of generating such easy money, Schwarz notes that this lucky soul would simply loan more money to keep hold of his or her profits:
About 90% of cryptocurrency "investment" and "mining" scams can be spotted just by knowing that nobody who has found some amazing way to get unusually high rates of return with very low risk would want to invest your money for you. They would just get a loan and keep the profit.
Even relatively modest two-percent daily returns are likely a tell-tale sign of a scam:
Do the math and see what 2% daily returns do after a year. Then ask yourself if someone who discovered that fountain of money could have any conceivable reason to want your money.
Taking pages from Bernie Madoff’s playbook
Investment pitches that guarantee steady rates of return are considered to be textbook fraudsters.
Over the past years, U.Today has covered countless incidents when crypto-related trading scams are impersonating politicians, businessmen, and celebrities on social media to lure gullible users with empty promises of phantom wealth.
What makes things worse, social media giants are reluctant to combat such scams. Earlier this month, Ripple CEO Brad Garlinghouse revealed that he was getting “death threats” from people who had fallen for YouTube scams with fake streams.
Of course, such shams are not limited to the world of crypto. In 2008, it came to light that former NASDAQ Bernie Madoff managed to execute the largest Ponzi scheme in history that relied pretty much on the same playbook by returning a steady one percent for his defrauded clients.