February 26, 2025 • 37 mins
The cryptocurrency world offers incredible opportunities, but it also comes with significant risks. Every day, new scams emerge, targeting both beginners and experienced investors. From phishing attacks to Ponzi schemes, fake exchanges, and wallet hacks, criminals are constantly finding new ways to exploit users and steal their funds. But how can you protect yourself?In this episode, we break down the most common crypto scams, how they work, and how you can avoid becoming a victim. We’ll explore real-life case studies of major financial frauds, including notorious scams like BitConnect, QuadrigaCX, and the 1MDB money laundering scandal. Learn about the tactics scammers use to manipulate investors, from fraudulent Initial Coin Offerings (ICOs) to fake celebrity endorsements promising unrealistic returns.🔐 Key Topics Covered in This Episode:
✔️ Crypto Wallet Security – How to safely store your digital assets and avoid losing access to your funds.
✔️ Common Crypto Scams – Ponzi schemes, phishing attacks, fake exchanges, and more.
✔️ Red Flags & Warning Signs – How to identify and avoid high-risk investments.
✔️ How Hackers Steal Crypto – Understanding malware, keyloggers, and social engineering tactics.
✔️ Regulations & Law Enforcement – What governments are doing to combat crypto fraud and protect investors.With billions of dollars lost to crypto-related scams each year, it’s more important than ever to stay informed and take proactive security measures. Whether you’re a seasoned investor or just getting started in the world of digital assets, this episode will provide essential insights and practical advice to help you navigate the crypto space safely.🔊 Tune in now and learn how to protect your investments from the growing threat of crypto fraud!
✔️ Crypto Wallet Security – How to safely store your digital assets and avoid losing access to your funds.
✔️ Common Crypto Scams – Ponzi schemes, phishing attacks, fake exchanges, and more.
✔️ Red Flags & Warning Signs – How to identify and avoid high-risk investments.
✔️ How Hackers Steal Crypto – Understanding malware, keyloggers, and social engineering tactics.
✔️ Regulations & Law Enforcement – What governments are doing to combat crypto fraud and protect investors.With billions of dollars lost to crypto-related scams each year, it’s more important than ever to stay informed and take proactive security measures. Whether you’re a seasoned investor or just getting started in the world of digital assets, this episode will provide essential insights and practical advice to help you navigate the crypto space safely.🔊 Tune in now and learn how to protect your investments from the growing threat of crypto fraud!
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
[Music]
(00:20):
[Music]
(00:46):
All right, strap in everyone because today we are going deep on crypto scams.
- Ooh, exciting. - You guys requested it.
So you already know that crypto is full of opportunities.
- Uh-huh. - But it's also crumbling with pitfalls.
- It really is. - And to really get a handle on this,
we've gathered a truly global collection of research for you guys.
- Awesome. - Articles, academic papers.
We even watched some Italian and English YouTube videos.
(01:10):
- Wow, covering all the bases. - So all of that to figure out how these scams actually work
and how we can avoid them. - That's right. You know, it's interesting though.
- It's that. - It's not always just about losing your money.
- Okay. - A lot of these scams really tap into some basic human emotions.
- Interesting. - Our desires.
- So let's start by getting the lay of the land. - Okay.
- What are some of the most common types of crypto scams out there?
(01:32):
- All right, well, fishing is a big one. - Of course, fishing.
- But it's not unique to crypto, though. - Right.
- It's all about creating fake websites. - Right.
- Or emails that look just like the legitimate platforms.
- Uh-oh. - But I think in the crypto world,
the sticks are even higher. - I think so too.
- Because you're dealing with things like private keys. - Oh, yeah.
- Essentially the password to your digital assets.
(01:55):
- Yeah, and the Caspersky blog actually had this chilling example
- Really? - About a fake, electric wallet
- Uh-oh. - That would infect computers with malware.
- Oh, wow. - It just makes you realize how easy it is to fall victim.
- If you're not careful. - If you're not super, super careful.
- Exactly. - So that's why using regular platform.
- Yes. - Double checking those URLs.
(02:17):
- Always, always. - It's crucial.
- Absolutely. But fishing is just the beginning.
- Oh no. - I mean, we also have the classic Ponzi and Pyramid schemes.
- Right. - Which have just found a new home in the crypto market.
- Oh, they love it there. - They do.
- The YouTube channel Crypto360 had a really good breakdown
of how these schemes usually work in the crypto world.
(02:38):
- Yeah. - And they often promise like incredibly high returns.
- I bet. - Guarantee.
- Something crazy like, woof that daily. - Oh, wow.
- But the reality is there's no real underlying investment.
- Right. - No business model.
- It's all about recruiting new investors to pay off the old ones.
And then when the supply of those new investors dries up.
(03:01):
- Yeah, what happens? - It all collapses.
- Just the whole thing falls apart. - Like a house of cards.
- Exactly. - And we've seen this ambit over and over here.
- Connect is like the notorious example of this.
- Yes, it is. - And it's important to remember
that these schemes can target anyone.
- It doesn't matter. - Doesn't matter how much money you have.
- Nope. - How sophisticated you are.
- Anyone can be a victim. - You can be a victim.
(03:22):
- Yes. - Now that big connect scam.
- Yeah. - It is such a fascinating case study.
- It really is. - I mean, they even had their own coin BCC.
- Oh, yeah. - Which was trading on major exchanges.
- Wow. - So how did they manage to fool so many people?
- I think part of it was just the audacity of their claims.
- Okay. - The promises they made were astronomical.
- Yeah. - And they really cultivated like a cult like following.
(03:44):
- Like a group of true believers. - Absolutely.
- You know that reminds me of something
that Stafford Bonn mentioned in his thesis.
- What's that? - About cryptocurrency fraud.
- Okay. - He argued that these scammers are really good
at exploiting the hype. - The hype.
- And the excitement. - Uh-huh.
- Surrounding new technologies. - Yeah.
Especially in those early stages.
- Yeah. - There's just a lot of uncertainty.
(04:05):
- It really knows how it works yet. - Exactly.
- But they just hear that it could be the next big thing. - That's right.
- So how do investors protect themselves from that hype?
- You have to be skeptical. - Be skeptical.
- You can't just take things at face value. - Right.
- You have to do your research, ask questions,
and really challenge assumptions. - So dig a little deeper.
- Exactly. - Okay, so that sounds like good life advice.
(04:26):
- Yeah. - But how does that apply to the crypto world specifically?
- Well, I'd start with the project's website,
- (laughs) - on your white paper. - All right.
- A legitimate project is gonna have a clear explanation
of their technology, their team, their goals, their roadmap.
- But scammers can create fake websites in white papers, right?
- Oh, of course they can. - Okay.
- That's why you gotta look beyond the surface.
(04:47):
- All right. - You have to do some independent research.
- Okay, so where do you go for that?
- Well, there are some rules like,
- Bunchan explorers. - What are those?
- They can be used to verify transactions.
- Oh, interesting. - Check the team's credentials on LinkedIn.
- Right. - And you can also look
for independent reviews and analyses from reputable sources.
- So blockchain explorers linked in independent reviews.
(05:10):
Those are all good actions listeners can take.
- Yes. - But what about, like, say, the language used?
- Oh, yeah. - In the white paper or on the website?
- Absolutely. - Anything there that could be like a red flag.
- If it's full of hype and jargon and unrealistic promises,
- Uh-huh. - That's a red flag. - Gotcha.
- Legitimate projects? - Yeah.
- Okay, clearly, transparently. - Mm-hmm.
(05:32):
- They don't have to resort to all of that.
- Okay, so we've talked about phishing and Ponzi schemes.
- Yes. - What other scams should investors be aware of?
- Fake eye-cows? - Fake eye-cows?
- Yes, or initial coin offerings. - Right.
- They're essentially fundraising events. - Okay.
- Where startups sell tokens to raise capital.
- Okay. - But scammers, they have figured out--
(05:53):
- Oh, I bet they have. - How to exploit this
by creating fake projects with no real technology or a team behind them?
- So they're just pocketing all the money? - Exactly.
- The repair case that was mentioned in BOM's thesis is a perfect example.
- Yep. - They raise millions. - And then poof.
- It makes you wonder, how can investors distinguish between
(06:14):
a legitimate eye-cow and a scant? - Through a research.
- Through a research. What does that look like?
- Look for a strong team with a proven track record.
- Right. - And a clear use case for their technology.
- Okay. - And a realistic road map for development.
- So are IQs just inherently risky then?
- They can be high risk. - Okay.
(06:35):
- But also high reward. - Gotcha.
- You know, it's important to remember that you're essentially betting on a startup.
- Uh-huh. - Very early stages.
- Yeah. - And there's always a possibility of failure.
- Even if it's legitimate. - Yes. Even if it's legitimate.
- That makes sense. - Yeah.
- So what other scams are lurking out there in the crypto shadows?
- Well, another really common one is the pump and dump scheme.
(06:57):
- The pump and dump. It might seem like a new phenomenon in crypto.
- Yeah. - But it's actually a very old trick.
- It is. It's been around for a while.
- The research that we have called crypto counterfeiting actually pointed out
that this type of market manipulation has been around for centuries.
- Series. - Dates back to the 1700.
- Oh, wow.
(07:18):
- The digital version of snake oil. - Exactly.
- How does it work? - They artificially inflate the price of a cryptocurrency
through coordinated buying. - Okay.
- And a lot of misleading information. - So creating a frenzy.
- Yes, of excitement and fomo.
- So once the price is pumped up, then what happens?
- The scammer's, "mump their holdings, leaving everyone else holding the bag."
(07:41):
- Holding the bag. - That's right.
- And then there are those scams that prey on our desire for passive income.
- Oh, yeah. - Like cloud mining scams.
- Cloud mining, it can be a legitimate way to earn cryptocurrency.
But there are a lot of scams.
- Okay. - These scams typically promise high returns with little to no effort.
- Oh, effortless passive income. - Exactly.
- What could go wrong? - Right.
- Well, the proton article mentioned that some of these scams actually pressure people
(08:05):
into depositing money directly into the developer's wallets.
- Oh, wow. - So if you're considering cloud mining,
do your research thoroughly. - For a little reason.
- Make sure the company's reputable.
- Mm-hmm. - And be wary of promises that sound too good to be true.
- If it sounds too good to be true. - It probably is.
- It probably is. - It's like a constant game of cat and mouse.
- Yes, it is. - As soon as investors learn about one scam,
(08:28):
- Yeah. - Another one pops up.
- Another one is born. - So what do we do?
- You have to stay informed and you have to cultivate a healthy skepticism.
- Healthy skepticism? - Yes.
- Again, great life advice. - It is.
- But in the crypto world, the stakes are a lot higher.
- Much higher. - So we are going to spend
the rest of this deep dive, equipping you guys
- Yes. - with all of the tools and knowledge you need
(08:51):
- Absolutely. - to navigate this crazy world.
- This complex world. - Yes.
- This often treacherous landscape. - Oh, I like that.
- Yeah. - All right, let's take a quick break.
- We'll be right back. - Sounds good.
All right, so we've talked about some of the most common types of crypto
- scams out there. - Yep.
- But what about the tactics? - The tactics.
- How do they actually, like, lure people in?
- Well, it's interesting. A lot of these scams,
(09:12):
they rely on psychological manipulation.
- Oh, okay. - It's not just about tricking you.
It's about tapping into your emotions.
- So it's about understanding human psychology.
- Absolutely. One of the most powerful emotions that scammers exploit is fear.
- Fear, okay. - They might try to scare you
into thinking your account's been hacked.
- Oh, no. - Or that you're going to miss out
- on, like, a once in a lifetime opportunity? - Pthomo.
(09:35):
- Exactly. - The YouTube video from young platform
- Uh-huh. - Had a great example of this.
- Oh, yeah. - They mentioned how no legitimate exchange
will ever call you on the phone.
- Right. - To ask you to move your money out of your account.
- Exactly. That's a huge red flag.
- Yeah, it's like a big ol' scam alert. - Absolutely.
- So if someone is pressuring you to act quickly,
- Mm-hmm. - That is a major red flag.
(09:56):
- Always, always. - Legitimate investment opportunities
don't disappear overnight. - They don't.
- It's like those late-night info-hersials call now operators are standing by.
- Exactly. - They're trying to pressure you
- into making a decision. - Before you've had time to think.
- Right, right. - And that pressure often goes hand in hand
- with a lack of transparency. - Okay, interesting.
- Think back to the Quadrigax case. - Yeah.
(10:18):
Gerald Cotton was basically running that whole exchange by himself.
- Right, no oversight. - No accountability.
- And that lack of transparency ultimately led to disaster.
- It did, and it's a stark reminder that
- Yeah. - They need to be wary of projects
- that operate in the shadows. - Speaking of Quadrigax.
- Yes. - There's something we should probably clarify.
- For our listeners. - What's that?
(10:39):
We've mentioned the term cold wallets a few times.
- But we haven't really explained what they are. - Oh, good point.
- So can you break that down for us? - So essentially,
a cold wallet is a type of cryptocurrency wallet
that is not connected to the internet.
- Okay. - It's considered one of the most secure ways
to store your crypto because it's offline.
(11:00):
- So it's less vulnerable to hacking? - Yeah, exactly.
- So in the Quadrigax case,
- Yeah. - Cotton held the only keys to these cold wallets.
- That's right. - And when he died?
- The funds were basically inaccessible.
- Wow. It's a cautionary tale. - It is.
- About the importance of choosing exchanges
- Yes. - that have transparent security measures.
- And multiple layers of redundancy.
(11:21):
- Redundancy, good word. - Right.
- Okay, so we've talked about fear and transparency.
But I think it's fair to say that greed plays a role in these scams as well.
- Absolutely. Scammers pray on our desire to get rich quick.
- I mean, don't we all want to get rich quick?
- Do, and they know that they're very good at crafting narratives
that appeal to our deepest desires.
(11:43):
- It's like the lottery. - Exactly.
- We all know the odds of winning are astronomically low.
- We do. - But we still buy those tickets.
- We dream of hitting the jackpot.
- We dream of hitting that jackpot. - That's right.
- And in the crypto world,
I feel like those dreams are amplified.
- I think so too. - Because you hear all these stories.
- You hear all these stories of people who have made fortunes overnight.
(12:04):
- Yes, you do.
- But are those stories really the exception not the role?
- I think so.
- So how can we cultivate a healthy skepticism?
- Good question.
- Without becoming jaded or cynical.
- Yeah, how can we approach the space with both enthusiasm and caution?
- Right, right.
- Well, I think it starts with education.
- Education, okay.
- The more you understand about how these scams work,
the better equipped you'll be to spot them and avoid them.
(12:28):
- But education isn't just about reading articles and watching videos, right?
- No. - It's about developing a critical mindset.
- Critical mindset and learning to ask the right questions.
- Exactly. - Okay, so let's say you've done your research.
- Okay. - And you're considering investing
in a crypto project.
What are some red flags that should give you pause?
- One of the biggest red flags is anonymous developers.
(12:51):
- Anonymous developers.
- If you can't find information about the team behind the project
or their credentials, seem suspect.
- Okay. - It's best to steer clear.
- The BitPanda Academy and Cryptomat articles both really emphasize that point.
- Absolutely. - Okay, so anonymous developers are a big no-no.
- Big no-no. - What else?
- Another red flag is pressure to act quickly.
(13:12):
- Okay, we talked about that.
- Yeah, scammers often use limited time offers.
- Right, don't miss out. - Exactly.
They'll say things like, "This is a once in a lifetime opportunity."
- Yeah. - But remember, legitimate investment opportunities
don't disappear overnight. - Right, they don't take their time.
- Take your time on research. - And don't let anyone rush you.
- Okay, so we got anonymous developers. - Mm-hmm.
(13:33):
- We got pressure tactics. - Yeah.
- Any other warning signs we should look out for?
- Well, one thing is poor communication.
- Poor communication, what does that look like?
- If the project's website, their white paper,
or their social media posts,
are full of grammatical errors.
- Okay. - Tipos and inconsistencies?
- That's a red flag. - It's a big red flag.
(13:54):
- The proton article also made that point.
- They did. They said that poorly written communications
could be a sign that the project isn't being run by professionals.
- Absolutely.
- So it's not just about the quality of the writing?
- No, it's about the substance of what's being said.
- Okay. - If the project's goals are vague,
or their roadmap is unrealistic,
or their technology is poorly explained, red flags all around.
(14:17):
- So it's not just about avoiding scams?
- No. - It's about finding legitimate projects.
- That are worth investing in.
- Okay, so how do we do that?
- It requires a deeper level of due diligence.
- Due diligence, so what does that look like?
- It's not enough to just avoid the obvious scams.
- Okay.
- You need to be able to evaluate the potential of a project.
- Okay.
- Assess the risks involved.
(14:39):
- That sounds like a lot of work.
- It can be, yeah.
- Where do you even begin?
- I always recommend starting with the team.
- The team, okay?
- Look for a team with a prusen track record in the industry.
- Okay.
- A strong technical background.
- Right.
- And a clear vision for the project.
- So it's not just about looking at their Lincoln profiles.
- No.
- It's about understanding their experience and motivation.
- Exactly.
- Okay, so once you've evaluated the team.
(15:01):
- Then what?
- What's next?
- You need to look at the technology.
- Okay.
- Does the project have a unique and valuable use case?
- Mm-hmm.
- Is the technology sound, is the code open source?
- Those are all good questions.
But how can the average investor even answer those questions?
- That's a good point.
- Sounds like you need a PhD in computer science to understand this stuff.
- You don't need a PhD.
(15:22):
- Okay, good.
- But you do need to be willing to put in the time and effort to learn.
- Okay, how?
- There are a lot of resources online.
- Oh, are there?
- There's a growing community of people who are really passionate
about sharing their knowledge and helping others.
- Awesome.
So it's about finding trustworthy sources of information.
- Exactly.
- Building a network of people that you can rely on.
(15:43):
- Absolutely.
- Okay, so we've talked about the importance of research and due diligence.
- Yes.
- But what about the emotional side of investing?
- That's a really important aspect.
- How can we avoid making impulsive decisions based on fear or greed?
- I think it's important to acknowledge that investing is never purely rational.
- Really?
(16:04):
- Our emotions inevitably play a role.
- Especially in the crypto world.
- Especially in the crypto world.
- With all the hype and volatility.
- Exactly.
- Okay, so what are your top tips for staying emotionally grounded in the crypto market?
- I think one of the most important things is to have a clear investment plan.
- Okay.
- And stick to it.
- Stick to it.
- Determine your risk tolerance.
(16:25):
- Okay.
- Set realistic goals.
- Right.
- Don't invest more than you can afford to lose.
- That's good advice for any type of investing.
- Any type of investing, but it's especially important in the crypto world.
- Right, because things change so quickly.
- Very quickly.
- So it's about having a long term perspective.
- Yes.
- Not getting caught up in those short term fluctuations of the market.
- And be patient.
- Patient.
(16:46):
- Okay.
- You're not going to get rich quick.
- Right.
- Building wealth takes time.
- Discipline.
- And a sound investment strategy.
- That's a good reminder for all of us.
- Yeah.
- But even with the best laid plans.
- Mm-hmm.
- It's still possible to get caught up at the hype.
- Yes.
- And make those impulsive decisions.
- It is.
We're all human.
- So what are some strategies for dealing with FOMO?
(17:09):
- FOMO.
- The fear of missing out.
- The fear of missing out.
- One of the most powerful and most powerful things in the crypto world.
- Oh, it really is.
- So how do we deal with it?
- I think it's helpful to remember that there will always be another opportunity.
- Okay.
- The crypto market is constantly evolving.
- Okay.
- There will always be new projects.
- Right.
- New trends emerging.
- So you don't need to jump on every bandwagon.
- Exactly.
- Focus on your own goals.
- Right.
(17:30):
- And don't compare yourself to others.
- That's hard though.
- It is hard, but it's so important.
- So it's about staying true to your own investment strategy.
- Absolutely.
- Not letting the noise of the market distract you.
- Absolutely.
- So if you do find yourself getting caught up in that FOMO, what do you do?
- Take a step back.
- Okay.
(17:51):
- Breathe.
- And just remind yourself.
- Of your long-term goals.
- Of your long-term goals.
- That's great advice.
- Thank you.
- But what if you've already made an impulsive decision?
- Oh.
- And you've invested in something that turns out to be a scam.
- Uh-oh.
- What do you do?
- Well, the first thing is to accept that you've made a mistake.
- Okay.
- Make mistakes.
It's important to learn from them.
(18:12):
- But that's easier said than done.
- I know.
- When you've lost money.
- It is natural to feel a lot of emotions, anger, frustration.
- You gain.
- Yeah.
- So what concrete steps can someone take if they think they've been scammed?
- The first step is to document everything.
- Document everything.
- Gather all the evidence you have, screen shots of conversations, transaction IDs, any relevant information.
(18:35):
- Okay.
And then who do you report this to?
- You can report it to the cryptocurrency exchange.
- Okay.
- Or wallet provider.
- Right.
- As well as to relevant government agencies.
- Okay.
- You can also report it to online scam reporting websites.
- Okay.
- And social media platforms.
- So even if you can't recover your funds, reporting this scam can help prevent others from becoming victims.
- Exactly.
(18:56):
- Okay.
That's a good reminder.
- And it's important to seek support.
- Support.
- Okay.
- Femmes and family.
- Family or even a therapist?
- Right.
This could be really traumatic.
- It can.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
(19:17):
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- Government oversight and regulation.
- Regulation.
- Regulation of the crypto space.
- What would that look like?
- It could involve things like licensing requirements for exchanges,
- Okay.
(19:38):
- Scripture kind-cambal rules.
- Okay.
- And just clear guidelines for ICOs.
- But some people would argue that regulation stifles innovation.
- I understand that perspective.
- Right.
- I think it's important to find a balance between innovation and consumer protection.
- Okay.
- We need to create a regulatory environment
- That fosters innovation
- Yeah.
- While also safeguarding investors from fraud and abuse.
(20:01):
- That sounds like a delicate balancing act.
- It is.
- A lot of policy makers around the world are probably grappling with this.
- They are.
- They are.
- So it's about creating a crypto ecosystem
- Yes.
- That is both innovative and trustworthy.
- Exactly.
- Okay. So we've covered a lot of ground in this discussion so far.
- We have.
- But before we move on to our final case study.
- Okay.
- I want to touch on a topic that we haven't really discussed yet.
(20:23):
- What's that?
- The role of community in the crypto world.
- Oh, the community. That's an important one.
- Yeah. So how can investors tap into that power?
- Well, there are a lot of online forums, social media groups, even in-person meetups
- Okay.
- where people can connect, share, and learn from each other.
- But there are also a lot of scams.
- Yeah.
(20:44):
- And misinformation circulating online.
- Absolutely.
- How do you distinguish between legitimate sources of information
- Mm-hmm.
- And those that are trying to mislead you?
- You have to be discerning.
- Discerning.
- Okay.
- Don't just believe everything you read online.
- Right, right.
- Look for sources that are credible, unbiased, and transparent.
- Transparent, so it's about doing your research.
- It is.
(21:05):
- Not relying on anonymous sources.
- Yes.
- Or those with a vested interest in promoting a certain project.
- Exactly.
- Okay, so be critical of the information that you're seeing.
- Be crucial.
- Yes.
- If something sounds too good to be true.
- It probably is.
- It probably is.
- That's the golden rule.
- That's the golden rule for life.
- So finding a balance between being open to new ideas, but also being skeptical of claims
(21:26):
that seem too good to be true.
- Yes, it's a delicate balance.
- Okay, so we talked about community.
- Yeah.
- But let's not forget about the individual investor's responsibility.
- Absolutely.
- To protect themselves.
- To protect themselves.
- What are some practical tips for staying safe?
- Strong, unique passwords?
- Okay.
- Two-factor authentication.
- Two-factor, that's good advice for just online security in general.
- In general.
(21:47):
- But in the crypto world.
- Yes.
- And then you can get a lot higher.
- Much higher.
- Because you're dealing with real money.
- Real money.
- Right, so strong password.
- Uh-huh.
- Two-factor authentication.
- What else?
- Protecting your devices.
- Protecting your devices, okay?
- Make sure your computer and your phone have up to date, antivirus software.
- Okay.
- Be wary of clicking on links.
- Yeah, don't do that.
- Or downloading files from unknown sources.
(22:09):
- So it's all about practicing good cyber hygiene.
- Good cyber hygiene.
- Okay, what about storing your crypto?
- Ah, that's a big one.
- Where should people be storing their crypto?
- So if you're holding large amounts of crypto,
it's generally not advisable to store it on an exchange.
- Because exchanges can be hacked?
- That's right, there's always that risk.
(22:30):
- Of losing your funds.
- Exactly.
- Okay, so where should you store it?
- A hardware wallet.
- A hardware wallet.
- We mentioned that if you do time.
- Uh-huh.
- But what exactly is it?
- So it's a physical device that stores your private keys off-flat.
- Just like Fort Knox for your crypto.
- Exactly.
- If you're serious about investing in cryptocurrency,
get a hardware wallet.
- Absolutely.
- So why is investment?
(22:51):
- Why is investment, yes.
- Okay, so we've got strong passwords,
- Uh-huh.
- Device security, hardware wallets.
- Yes, what else?
- But what about the human element?
- The human element, that's a tricky one.
- How can we protect ourselves from our own biases
and our emotional impulses?
- Well, I think one of the most important things is
to be aware of the psychological tactics that scammers use.
(23:12):
- Okay, let's break that down.
- Okay.
- What are some common tactics that they use to manipulate our emotions?
- Creating a sense of urgency or scarcity.
- Okay.
- Or scarcity, right?
- They might say things like, this is a limited time offer.
- Right.
- Or only a few spots left.
- Pressure you into making a decision.
- Yes, before you've had time to think it through.
- So they're playing on our emotions?
(23:33):
- Exactly.
- And another tactic they use is social proof?
- Social proof, yes.
- What's that?
- They might create fake testimonials.
- Oh, interesting.
- Or use bots to make it seem like everyone is investing in their project?
- So they're trying to create a herd mentality?
- Exactly.
- Where people feel like they need to jump on the bandwagon.
- Before it's too late.
- Right.
- And they often use authority figures.
- Okay.
(23:54):
- Or celebrity endorsements.
- Celebrity endorsements.
- To endure with their projects.
- Even if those endorsements are fake.
- Even if they're fake.
- So it's about being aware of these tactics.
- Yes.
- And not letting our emotions cloud our judgment.
- Don't let your emotions take over.
- So even if your favorite influencer is promoting a particular coin.
- Yeah.
- You still need to do your own due diligence.
- Absolutely.
(24:15):
- And if something sounds too good to be true.
- It probably is.
- It probably is.
- That's a good rule of thumb for life in general.
- For life in general.
- Okay, so we've talked about the psychological tactics that scammers use.
- Mm-hmm.
- But I think it's important to acknowledge that some people are more vulnerable to these scams.
- Absolutely.
And I think it's important to be compassionate and understanding towards those who have fallen victim.
(24:36):
- Absolutely.
- It's easy to judge, but we have to remember anyone can be fooled.
- Right, especially if they're targeted by these skilled manipulators.
- Oh yeah, these scammers are professionals.
- Oh.
- They know what they're doing.
- They do.
- They know how to exploit people's vulnerabilities.
- And they're constantly refining their tactics.
- Constantly.
- So it's not about blaming the victim.
- No.
- It's about understanding the factors that make people susceptible.
(24:58):
- To these scams.
- And one of those factors is financial insecurity.
- Oh, absolutely.
- Right, if someone is struggling financially.
- They might be more likely to take risks.
- They might.
- Hoping to improve their situation.
- Right, scammers often target people who are desperate for a financial breakthrough.
- Okay.
- They might promise unrealistic returns.
- Yeah.
- Or offer these investment opportunities that seem impossible to pass up.
(25:21):
- So be aware of your own vulnerabilities.
- Yes.
- Be extra cautious.
- Especially when you're feeling financially stressed.
- Okay. And if you're considering making a major investment.
- Yeah.
- Maybe reach out to a financial advisor.
- A trusted friend.
- A friend or family member.
- Family member.
- Okay, so we've talked about due diligence, emotional awareness, community support.
- Yeah.
(25:42):
- But I think it's also important to acknowledge that the crypto world is constantly evolving.
- It is.
- New scams are emerging.
- All the time.
- All the time.
- It could be hard to keep up.
- So how do you stay ahead of the curve?
- It's crucial to have a growth mindset.
- A growth mindset.
- Be willing to adapt.
- To the changing landscape.
- To the changing landscape.
- And to be open enough to just learn the basics.
(26:04):
You need to stay informed about the latest trends.
- Right.
- Developments in the crypto world.
- So how do you do that?
- Read industry news.
- Okay.
- Follow reputable sources on social media.
- Okay.
- A 10 conferences webinars.
- So it's about making crypto education an ongoing process.
- An ongoing process.
- So be proactive.
(26:25):
- Be proactive.
- Be patient.
- Wait for the scams to happen to you.
- That's right.
- Take steps to protect yourself.
Now.
- Now.
- Okay.
We've talked a lot about the risks and challenges of investing in cryptocurrency.
- Yeah.
- But I think it's important to end on a positive note.
- A positive note.
- So despite the scams, the volatility, there's still a lot of potential.
(26:45):
- There is.
- There is.
- In this space.
- So it's about finding that balance between being aware of the risks, but also being excited about the possibility.
- That's it.
That's the key.
- Okay.
And how do we find that balance?
- Education.
- Awareness.
- And awareness.
- And a commitment to ethical behavior.
- From all participants in the space.
(27:06):
- All participants.
- Okay.
Well said.
- Thank you.
- So we've covered a lot of ground in this deep dive.
- We have.
- But before we wrap things up, I want to take a look at one more case study that illustrates
the human cost of these scams.
- Okay.
Let's hear it.
- This one comes from the YouTube channel, Il Cryptoverso.
They did a deep dive into the infamous Mt. Gox hack.
- Oh, Mt. Gox.
(27:26):
- Which is considered one of the most devastating events in crypto history.
- It was.
- For those who might not be familiar.
- Yeah.
- Mt. Gox was once the world's largest bitcoin exchange.
- The largest.
- Founded in 2010 by Jed McHale.
- Jed McHale.
- And it quickly gained popularity as the go to platform for buying and selling bitcoin.
- Back then.
- Yeah.
(27:46):
- The regulatory landscape was even more wild west than it is today.
- So there were very few safeguards in place?
- Very few.
- To protect consumers.
- It was a different time.
- It was a very different time.
- And that lack of oversight ultimately proved to be Mt. Gox's downfall.
- Okay, so what happened?
- Tell me the story.
- Well, things started to unravel in 2011.
- Okay.
- When Mt. Gox suffered its first major hack.
(28:07):
- Oh, no.
- They lost a relatively small amount of bitcoin at the time.
- Okay.
- But it exposed vulnerabilities in their security systems.
- And this is where the story gets really interesting.
- Oh, what happened?
- There's some evidence that suggests that the hack might have been an inside job.
- An inside job, okay.
- Some people believe that Jed McHale of himself?
- Jed McHale.
(28:28):
- Might have been involved.
- Wow.
- And remember, this is before he went on to found Ripple.
- Right.
- It's a crazy twist.
- So what happened after that first hack?
- Yeah, did they beef up your security?
- They claimed they did.
- They claimed they did.
- But the damage was already done.
- The trust was broken.
- Trust in the exchange was shaken.
- And that's fatal in the financial world.
- It is.
- The things we're about to get much, much worse in 2014.
(28:50):
- Yeah.
- Mt. Gox suffered another much larger hack.
- Okay.
- And this is the one.
- This is the one that brought them down.
- That brought them down.
- Yeah.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
(29:11):
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
(29:32):
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then suddenly you see that same car everywhere.
- Yeah.
- You were still consciously filtering it out before.
- Yeah.
- But now your brain is primed to notice it.
- Exactly.
- It's the same with those crypto scams.
- It is.
(29:53):
- If you're convinced that you're going to get rich quick,
- Yeah.
- You're more likely to fall for a scam
that just reinforces that belief.
- Absolutely.
- Okay.
- What about the availability bias?
- Availability bias.
- That's the one where we overestimate
the likelihood of events
that are easily recalled.
- That's right. So if someone has recently heard about a friend
(30:15):
who made a fortune in crypto,
they might be more likely to believe that they can do the same.
- Right. Right.
- Even though the odds are stacked against them.
- Even though statistically it's probably not going to happen.
- It's probably not going to happen.
- It's probably not going to happen.
- It's like those lottery commercials
that show people celebrating their big wins.
- Exactly.
- They make it seem like winning is easy and common.
- Right.
- But in reality it's incredibly rare.
(30:36):
- Incredibly rare.
- Don't forget about the framing effect.
- The framing effect.
- That's where the way information is presented.
- Yes.
- Can influence our decisions.
- Even if the underlying facts are the same.
- So a scammer might frame a really risky investment opportunity.
- Right.
- As a sure thing.
- Right.
- Once in a lifetime chance to get rich.
- Absolutely.
- Making it seem less risky than it actually is.
(30:57):
- Exactly.
- It's like those investment gurus.
- Oh, the gurus.
- Who claim to have the secrets formula for beating the market.
- They're everywhere.
- They use all the fancy language.
- Yeah.
- The impressive charts.
- It's all smoking mirrors.
- It gets even more credible.
- Right.
- But often it's all smoking mirrors.
- It is.
- Okay, so it's important to be aware of these biases.
- Yes.
- And to make decisions based on logic and evidence.
(31:18):
- That's right.
- Not emotions.
- Not emotions.
- Easier said than done sometimes, right?
- It is where emotional beings.
- We are.
- But with practice and awareness, we can train ourselves to be more objective.
- Mm-hmm.
- Less susceptible to these cognitive traps.
- So protecting yourself from crypto scams.
- Yeah.
- It's not just about learning about all the different types of scams out there.
- No.
- It's about understanding how our own minds work.
(31:41):
- Exactly.
And that's what makes this topic so fascinating.
- It is fascinating.
- It's technology, it's finance, it's psychology.
- Absolutely.
And speaking of psychology.
- Yes.
- I think it's also important to talk about the role of social pressure.
- Social pressure, you?
- In these scams.
- Absolutely, especially in the crypto world.
- Yeah.
Where there's just so much hype and fomo.
- So much fomo.
(32:02):
- Scammers know this.
- They do.
And they often exploit this by creating a sense of community and belonging.
- Right.
- They might create these exclusive telegram groups, discord servers, where people can connect, share, and cider information.
- But because these groups are often filled with bots.
- Yes.
- And page show.
- Page show.
- It could be really hard to distinguish between genuine enthusiasm and manufactured hype.
(32:27):
- That's right, they create an echo chamber.
- An echo chamber?
- Where everyone is just reinforcing each other's beliefs.
- Yeah.
- And anyone who disagrees, they're quickly silenced.
- It's almost like a cult.
- It is.
- Where the leaders' pronouncements are accepted without question.
- Yeah.
- Scary.
- So how do we resist that allure?
- Good question.
- How do we avoid getting caught up in that hype?
- Well, one thing is to remember that there's not such thing as a sure thing in crypto.
(32:51):
If someone is promising you guaranteed returns or insider information.
- It's a scam.
- It's almost certainly a scam.
- What about those multi-level marketing scams?
- Oh, MLN.
- There's so prevalent.
- There's so prevalent in the crypto world.
- They're everywhere.
- How do those work?
- Classic example of how scammers exploit social preher.
- Okay.
- Encourage people to recruit their friends and family members.
(33:12):
- Right.
- Promising them commissions and rewards for building a downline.
- A downline.
- That's right.
- But the reality is most people who get involved in MLNs end up losing money.
- The only people who benefit are the ones at the top.
- Exactly.
At the top of the pyramid.
- Okay, so how can investor distinguish between a legitimate crypto project?
- Mm-hmm.
- And an MLM scam.
(33:34):
- Well, one red flag is that MLMs typically focus more on recruitment than on the underlying product or service.
- So they're more interested in getting people to sign up.
- Yes.
- And pay fees.
- Pay fees.
- Then they are in actually developing a sustainable business.
- Exactly.
- Another red flag is that MLMs often use those high pressure sales tactics.
- Oh, yeah.
(33:55):
- Make unrealistic promises.
- About potential earnings.
- So it's all about creating that sense of urgency and fomo.
- Exactly.
They want you to make a decision based on emotion, not logic.
- To be aware of these tactics.
- Be aware of your research.
- Always do your research.
- Before getting involved in any crypto project.
- Absolutely.
- Especially one that involves recruitment or multi-level marketing.
(34:18):
- If it sounds too good to be true.
- It probably is.
- It probably is.
- And there's no shame in saying no.
- No shame at all.
- If you're not comfortable with the risks involved.
- Or you don't fully understand the business model?
- Yeah.
- It's walk away.
- Walk away.
We've covered so much today.
- So much.
- But what about the future?
- The future.
- What trends do you see emerging in the world of crypto scams?
- Oh, I think one trend we're going to see is an increase in the sophistication of these scams.
(34:43):
- The scammers are getting smarter.
- Absolutely.
They're using AI, machine learning, advanced technology.
- To create more convincing scams?
- Yes.
And to target their victims more effectively?
- That's a little scary.
- It is a little bit scary.
- So it's a constant arms race?
- It is, but I think we have the advantage.
- Okay.
- We have the power of knowledge.
- That's true.
Knowledge is power.
(35:04):
- The more we learn about these scams, the better equipped will be to protect ourselves.
- Okay.
What else?
- I also think we're going to see an increase in the use of social engineering.
- Social engineering.
Now what exactly is that?
- So it's a type of manipulation that relies on psychological tricks, deception,
- Right.
- To persuade people to divulge sensitive information.
(35:26):
- Okay.
- So we have a lot of different social interactions that are not in their best interest.
- So it's like fishing, but instead of using fake websites or emails,
- Yeah.
- They're using human interaction.
- Exactly.
And it can be really effective.
- Okay.
- These scammers are very skilled at building rapport.
- Oh, I bet they are.
- And trust with their victims.
- They might pretend to be a friend or a colleague?
- They might--
- Even a romantic interest?
- Even a romantic interest?
(35:47):
- Oh wow.
- To gain your confidence.
- And then exploit that trust.
- Exactly.
And I think we're going to see a lot more of this in the crypto world,
- Okay.
- Because it's a relatively easy way to target people.
- Okay.
- And then, you know, the new to crypto.
- Right.
- Might not be as aware of the risks.
- So be cautious about who you trust online.
- Very cautious.
- And be wary of anyone who asks you for sensitive information.
- Absolutely.
(36:08):
Especially things like your private keys.
- Yeah.
Or your seed phrase.
- Seed phrase.
Never give that out.
- Never.
- And be aware of the signs.
- What are the signs?
- Pressure tactics.
- Right.
- Flattery.
Appeals to emotion.
- So use your critical thinking skills.
- Always.
- If something feels off.
- Yeah.
- Too good to be true.
- It probably is.
- It probably is.
- That's the golden rule.
(36:29):
- That's the golden rule.
- We've covered a lot of ground in this deep dive.
- We have.
We've gone deep.
- The world of cryptocurrency.
- Yeah.
- Full of opportunity.
- Yes.
- But also fraught with risk.
- It is.
But I do believe that the potential rewards outweigh the risks.
- Okay.
- As long as we're approaching the space with caution.
- Right.
- And a healthy dose of skepticism.
- So it's about finding that balance.
(36:50):
- That balance.
- Between enthusiasm and vigilance.
- Exactly.
- And education is key.
- Education is key.
- The more we learn about crypto.
- Mm-hmm.
- The better equipped we'll be to navigate this landscape.
- This complex and constantly evolving landscape.
- Well said.
- Thanks you.
- Thanks for joining us on this journey.
- Been a pleasure.
- Into the world of cryptocurrency scams.
- Yeah.
(37:11):
- Hopefully you found it informative and empowering.
- Absolutely.
- Remember, stay vigilant.
- Stay informed.
- And keep exploring.
- Keep exploring.
- The future of crypto is bright.
- It is.
- But it's up to all of us to make it safe and secure.
- That's right.
[Music]
(00:20):
[Music]
(00:46):
All right, strap in everyone because today we are going deep on crypto scams.
- Ooh, exciting. - You guys requested it.
So you already know that crypto is full of opportunities.
- Uh-huh. - But it's also crumbling with pitfalls.
- It really is. - And to really get a handle on this,
we've gathered a truly global collection of research for you guys.
- Awesome. - Articles, academic papers.
We even watched some Italian and English YouTube videos.
(01:10):
- Wow, covering all the bases. - So all of that to figure out how these scams actually work
and how we can avoid them. - That's right. You know, it's interesting though.
- It's that. - It's not always just about losing your money.
- Okay. - A lot of these scams really tap into some basic human emotions.
- Interesting. - Our desires.
- So let's start by getting the lay of the land. - Okay.
- What are some of the most common types of crypto scams out there?
(01:32):
- All right, well, fishing is a big one. - Of course, fishing.
- But it's not unique to crypto, though. - Right.
- It's all about creating fake websites. - Right.
- Or emails that look just like the legitimate platforms.
- Uh-oh. - But I think in the crypto world,
the sticks are even higher. - I think so too.
- Because you're dealing with things like private keys. - Oh, yeah.
- Essentially the password to your digital assets.
(01:55):
- Yeah, and the Caspersky blog actually had this chilling example
- Really? - About a fake, electric wallet
- Uh-oh. - That would infect computers with malware.
- Oh, wow. - It just makes you realize how easy it is to fall victim.
- If you're not careful. - If you're not super, super careful.
- Exactly. - So that's why using regular platform.
- Yes. - Double checking those URLs.
(02:17):
- Always, always. - It's crucial.
- Absolutely. But fishing is just the beginning.
- Oh no. - I mean, we also have the classic Ponzi and Pyramid schemes.
- Right. - Which have just found a new home in the crypto market.
- Oh, they love it there. - They do.
- The YouTube channel Crypto360 had a really good breakdown
of how these schemes usually work in the crypto world.
(02:38):
- Yeah. - And they often promise like incredibly high returns.
- I bet. - Guarantee.
- Something crazy like, woof that daily. - Oh, wow.
- But the reality is there's no real underlying investment.
- Right. - No business model.
- It's all about recruiting new investors to pay off the old ones.
And then when the supply of those new investors dries up.
(03:01):
- Yeah, what happens? - It all collapses.
- Just the whole thing falls apart. - Like a house of cards.
- Exactly. - And we've seen this ambit over and over here.
- Connect is like the notorious example of this.
- Yes, it is. - And it's important to remember
that these schemes can target anyone.
- It doesn't matter. - Doesn't matter how much money you have.
- Nope. - How sophisticated you are.
- Anyone can be a victim. - You can be a victim.
(03:22):
- Yes. - Now that big connect scam.
- Yeah. - It is such a fascinating case study.
- It really is. - I mean, they even had their own coin BCC.
- Oh, yeah. - Which was trading on major exchanges.
- Wow. - So how did they manage to fool so many people?
- I think part of it was just the audacity of their claims.
- Okay. - The promises they made were astronomical.
- Yeah. - And they really cultivated like a cult like following.
(03:44):
- Like a group of true believers. - Absolutely.
- You know that reminds me of something
that Stafford Bonn mentioned in his thesis.
- What's that? - About cryptocurrency fraud.
- Okay. - He argued that these scammers are really good
at exploiting the hype. - The hype.
- And the excitement. - Uh-huh.
- Surrounding new technologies. - Yeah.
Especially in those early stages.
- Yeah. - There's just a lot of uncertainty.
(04:05):
- It really knows how it works yet. - Exactly.
- But they just hear that it could be the next big thing. - That's right.
- So how do investors protect themselves from that hype?
- You have to be skeptical. - Be skeptical.
- You can't just take things at face value. - Right.
- You have to do your research, ask questions,
and really challenge assumptions. - So dig a little deeper.
- Exactly. - Okay, so that sounds like good life advice.
(04:26):
- Yeah. - But how does that apply to the crypto world specifically?
- Well, I'd start with the project's website,
- (laughs) - on your white paper. - All right.
- A legitimate project is gonna have a clear explanation
of their technology, their team, their goals, their roadmap.
- But scammers can create fake websites in white papers, right?
- Oh, of course they can. - Okay.
- That's why you gotta look beyond the surface.
(04:47):
- All right. - You have to do some independent research.
- Okay, so where do you go for that?
- Well, there are some rules like,
- Bunchan explorers. - What are those?
- They can be used to verify transactions.
- Oh, interesting. - Check the team's credentials on LinkedIn.
- Right. - And you can also look
for independent reviews and analyses from reputable sources.
- So blockchain explorers linked in independent reviews.
(05:10):
Those are all good actions listeners can take.
- Yes. - But what about, like, say, the language used?
- Oh, yeah. - In the white paper or on the website?
- Absolutely. - Anything there that could be like a red flag.
- If it's full of hype and jargon and unrealistic promises,
- Uh-huh. - That's a red flag. - Gotcha.
- Legitimate projects? - Yeah.
- Okay, clearly, transparently. - Mm-hmm.
(05:32):
- They don't have to resort to all of that.
- Okay, so we've talked about phishing and Ponzi schemes.
- Yes. - What other scams should investors be aware of?
- Fake eye-cows? - Fake eye-cows?
- Yes, or initial coin offerings. - Right.
- They're essentially fundraising events. - Okay.
- Where startups sell tokens to raise capital.
- Okay. - But scammers, they have figured out--
(05:53):
- Oh, I bet they have. - How to exploit this
by creating fake projects with no real technology or a team behind them?
- So they're just pocketing all the money? - Exactly.
- The repair case that was mentioned in BOM's thesis is a perfect example.
- Yep. - They raise millions. - And then poof.
- It makes you wonder, how can investors distinguish between
(06:14):
a legitimate eye-cow and a scant? - Through a research.
- Through a research. What does that look like?
- Look for a strong team with a proven track record.
- Right. - And a clear use case for their technology.
- Okay. - And a realistic road map for development.
- So are IQs just inherently risky then?
- They can be high risk. - Okay.
(06:35):
- But also high reward. - Gotcha.
- You know, it's important to remember that you're essentially betting on a startup.
- Uh-huh. - Very early stages.
- Yeah. - And there's always a possibility of failure.
- Even if it's legitimate. - Yes. Even if it's legitimate.
- That makes sense. - Yeah.
- So what other scams are lurking out there in the crypto shadows?
- Well, another really common one is the pump and dump scheme.
(06:57):
- The pump and dump. It might seem like a new phenomenon in crypto.
- Yeah. - But it's actually a very old trick.
- It is. It's been around for a while.
- The research that we have called crypto counterfeiting actually pointed out
that this type of market manipulation has been around for centuries.
- Series. - Dates back to the 1700.
- Oh, wow.
(07:18):
- The digital version of snake oil. - Exactly.
- How does it work? - They artificially inflate the price of a cryptocurrency
through coordinated buying. - Okay.
- And a lot of misleading information. - So creating a frenzy.
- Yes, of excitement and fomo.
- So once the price is pumped up, then what happens?
- The scammer's, "mump their holdings, leaving everyone else holding the bag."
(07:41):
- Holding the bag. - That's right.
- And then there are those scams that prey on our desire for passive income.
- Oh, yeah. - Like cloud mining scams.
- Cloud mining, it can be a legitimate way to earn cryptocurrency.
But there are a lot of scams.
- Okay. - These scams typically promise high returns with little to no effort.
- Oh, effortless passive income. - Exactly.
- What could go wrong? - Right.
- Well, the proton article mentioned that some of these scams actually pressure people
(08:05):
into depositing money directly into the developer's wallets.
- Oh, wow. - So if you're considering cloud mining,
do your research thoroughly. - For a little reason.
- Make sure the company's reputable.
- Mm-hmm. - And be wary of promises that sound too good to be true.
- If it sounds too good to be true. - It probably is.
- It probably is. - It's like a constant game of cat and mouse.
- Yes, it is. - As soon as investors learn about one scam,
(08:28):
- Yeah. - Another one pops up.
- Another one is born. - So what do we do?
- You have to stay informed and you have to cultivate a healthy skepticism.
- Healthy skepticism? - Yes.
- Again, great life advice. - It is.
- But in the crypto world, the stakes are a lot higher.
- Much higher. - So we are going to spend
the rest of this deep dive, equipping you guys
- Yes. - with all of the tools and knowledge you need
(08:51):
- Absolutely. - to navigate this crazy world.
- This complex world. - Yes.
- This often treacherous landscape. - Oh, I like that.
- Yeah. - All right, let's take a quick break.
- We'll be right back. - Sounds good.
All right, so we've talked about some of the most common types of crypto
- scams out there. - Yep.
- But what about the tactics? - The tactics.
- How do they actually, like, lure people in?
- Well, it's interesting. A lot of these scams,
(09:12):
they rely on psychological manipulation.
- Oh, okay. - It's not just about tricking you.
It's about tapping into your emotions.
- So it's about understanding human psychology.
- Absolutely. One of the most powerful emotions that scammers exploit is fear.
- Fear, okay. - They might try to scare you
into thinking your account's been hacked.
- Oh, no. - Or that you're going to miss out
- on, like, a once in a lifetime opportunity? - Pthomo.
(09:35):
- Exactly. - The YouTube video from young platform
- Uh-huh. - Had a great example of this.
- Oh, yeah. - They mentioned how no legitimate exchange
will ever call you on the phone.
- Right. - To ask you to move your money out of your account.
- Exactly. That's a huge red flag.
- Yeah, it's like a big ol' scam alert. - Absolutely.
- So if someone is pressuring you to act quickly,
- Mm-hmm. - That is a major red flag.
(09:56):
- Always, always. - Legitimate investment opportunities
don't disappear overnight. - They don't.
- It's like those late-night info-hersials call now operators are standing by.
- Exactly. - They're trying to pressure you
- into making a decision. - Before you've had time to think.
- Right, right. - And that pressure often goes hand in hand
- with a lack of transparency. - Okay, interesting.
- Think back to the Quadrigax case. - Yeah.
(10:18):
Gerald Cotton was basically running that whole exchange by himself.
- Right, no oversight. - No accountability.
- And that lack of transparency ultimately led to disaster.
- It did, and it's a stark reminder that
- Yeah. - They need to be wary of projects
- that operate in the shadows. - Speaking of Quadrigax.
- Yes. - There's something we should probably clarify.
- For our listeners. - What's that?
(10:39):
We've mentioned the term cold wallets a few times.
- But we haven't really explained what they are. - Oh, good point.
- So can you break that down for us? - So essentially,
a cold wallet is a type of cryptocurrency wallet
that is not connected to the internet.
- Okay. - It's considered one of the most secure ways
to store your crypto because it's offline.
(11:00):
- So it's less vulnerable to hacking? - Yeah, exactly.
- So in the Quadrigax case,
- Yeah. - Cotton held the only keys to these cold wallets.
- That's right. - And when he died?
- The funds were basically inaccessible.
- Wow. It's a cautionary tale. - It is.
- About the importance of choosing exchanges
- Yes. - that have transparent security measures.
- And multiple layers of redundancy.
(11:21):
- Redundancy, good word. - Right.
- Okay, so we've talked about fear and transparency.
But I think it's fair to say that greed plays a role in these scams as well.
- Absolutely. Scammers pray on our desire to get rich quick.
- I mean, don't we all want to get rich quick?
- Do, and they know that they're very good at crafting narratives
that appeal to our deepest desires.
(11:43):
- It's like the lottery. - Exactly.
- We all know the odds of winning are astronomically low.
- We do. - But we still buy those tickets.
- We dream of hitting the jackpot.
- We dream of hitting that jackpot. - That's right.
- And in the crypto world,
I feel like those dreams are amplified.
- I think so too. - Because you hear all these stories.
- You hear all these stories of people who have made fortunes overnight.
(12:04):
- Yes, you do.
- But are those stories really the exception not the role?
- I think so.
- So how can we cultivate a healthy skepticism?
- Good question.
- Without becoming jaded or cynical.
- Yeah, how can we approach the space with both enthusiasm and caution?
- Right, right.
- Well, I think it starts with education.
- Education, okay.
- The more you understand about how these scams work,
the better equipped you'll be to spot them and avoid them.
(12:28):
- But education isn't just about reading articles and watching videos, right?
- No. - It's about developing a critical mindset.
- Critical mindset and learning to ask the right questions.
- Exactly. - Okay, so let's say you've done your research.
- Okay. - And you're considering investing
in a crypto project.
What are some red flags that should give you pause?
- One of the biggest red flags is anonymous developers.
(12:51):
- Anonymous developers.
- If you can't find information about the team behind the project
or their credentials, seem suspect.
- Okay. - It's best to steer clear.
- The BitPanda Academy and Cryptomat articles both really emphasize that point.
- Absolutely. - Okay, so anonymous developers are a big no-no.
- Big no-no. - What else?
- Another red flag is pressure to act quickly.
(13:12):
- Okay, we talked about that.
- Yeah, scammers often use limited time offers.
- Right, don't miss out. - Exactly.
They'll say things like, "This is a once in a lifetime opportunity."
- Yeah. - But remember, legitimate investment opportunities
don't disappear overnight. - Right, they don't take their time.
- Take your time on research. - And don't let anyone rush you.
- Okay, so we got anonymous developers. - Mm-hmm.
(13:33):
- We got pressure tactics. - Yeah.
- Any other warning signs we should look out for?
- Well, one thing is poor communication.
- Poor communication, what does that look like?
- If the project's website, their white paper,
or their social media posts,
are full of grammatical errors.
- Okay. - Tipos and inconsistencies?
- That's a red flag. - It's a big red flag.
(13:54):
- The proton article also made that point.
- They did. They said that poorly written communications
could be a sign that the project isn't being run by professionals.
- Absolutely.
- So it's not just about the quality of the writing?
- No, it's about the substance of what's being said.
- Okay. - If the project's goals are vague,
or their roadmap is unrealistic,
or their technology is poorly explained, red flags all around.
(14:17):
- So it's not just about avoiding scams?
- No. - It's about finding legitimate projects.
- That are worth investing in.
- Okay, so how do we do that?
- It requires a deeper level of due diligence.
- Due diligence, so what does that look like?
- It's not enough to just avoid the obvious scams.
- Okay.
- You need to be able to evaluate the potential of a project.
- Okay.
- Assess the risks involved.
(14:39):
- That sounds like a lot of work.
- It can be, yeah.
- Where do you even begin?
- I always recommend starting with the team.
- The team, okay?
- Look for a team with a prusen track record in the industry.
- Okay.
- A strong technical background.
- Right.
- And a clear vision for the project.
- So it's not just about looking at their Lincoln profiles.
- No.
- It's about understanding their experience and motivation.
- Exactly.
- Okay, so once you've evaluated the team.
(15:01):
- Then what?
- What's next?
- You need to look at the technology.
- Okay.
- Does the project have a unique and valuable use case?
- Mm-hmm.
- Is the technology sound, is the code open source?
- Those are all good questions.
But how can the average investor even answer those questions?
- That's a good point.
- Sounds like you need a PhD in computer science to understand this stuff.
- You don't need a PhD.
(15:22):
- Okay, good.
- But you do need to be willing to put in the time and effort to learn.
- Okay, how?
- There are a lot of resources online.
- Oh, are there?
- There's a growing community of people who are really passionate
about sharing their knowledge and helping others.
- Awesome.
So it's about finding trustworthy sources of information.
- Exactly.
- Building a network of people that you can rely on.
(15:43):
- Absolutely.
- Okay, so we've talked about the importance of research and due diligence.
- Yes.
- But what about the emotional side of investing?
- That's a really important aspect.
- How can we avoid making impulsive decisions based on fear or greed?
- I think it's important to acknowledge that investing is never purely rational.
- Really?
(16:04):
- Our emotions inevitably play a role.
- Especially in the crypto world.
- Especially in the crypto world.
- With all the hype and volatility.
- Exactly.
- Okay, so what are your top tips for staying emotionally grounded in the crypto market?
- I think one of the most important things is to have a clear investment plan.
- Okay.
- And stick to it.
- Stick to it.
- Determine your risk tolerance.
(16:25):
- Okay.
- Set realistic goals.
- Right.
- Don't invest more than you can afford to lose.
- That's good advice for any type of investing.
- Any type of investing, but it's especially important in the crypto world.
- Right, because things change so quickly.
- Very quickly.
- So it's about having a long term perspective.
- Yes.
- Not getting caught up in those short term fluctuations of the market.
- And be patient.
- Patient.
(16:46):
- Okay.
- You're not going to get rich quick.
- Right.
- Building wealth takes time.
- Discipline.
- And a sound investment strategy.
- That's a good reminder for all of us.
- Yeah.
- But even with the best laid plans.
- Mm-hmm.
- It's still possible to get caught up at the hype.
- Yes.
- And make those impulsive decisions.
- It is.
We're all human.
- So what are some strategies for dealing with FOMO?
(17:09):
- FOMO.
- The fear of missing out.
- The fear of missing out.
- One of the most powerful and most powerful things in the crypto world.
- Oh, it really is.
- So how do we deal with it?
- I think it's helpful to remember that there will always be another opportunity.
- Okay.
- The crypto market is constantly evolving.
- Okay.
- There will always be new projects.
- Right.
- New trends emerging.
- So you don't need to jump on every bandwagon.
- Exactly.
- Focus on your own goals.
- Right.
(17:30):
- And don't compare yourself to others.
- That's hard though.
- It is hard, but it's so important.
- So it's about staying true to your own investment strategy.
- Absolutely.
- Not letting the noise of the market distract you.
- Absolutely.
- So if you do find yourself getting caught up in that FOMO, what do you do?
- Take a step back.
- Okay.
(17:51):
- Breathe.
- And just remind yourself.
- Of your long-term goals.
- Of your long-term goals.
- That's great advice.
- Thank you.
- But what if you've already made an impulsive decision?
- Oh.
- And you've invested in something that turns out to be a scam.
- Uh-oh.
- What do you do?
- Well, the first thing is to accept that you've made a mistake.
- Okay.
- Make mistakes.
It's important to learn from them.
(18:12):
- But that's easier said than done.
- I know.
- When you've lost money.
- It is natural to feel a lot of emotions, anger, frustration.
- You gain.
- Yeah.
- So what concrete steps can someone take if they think they've been scammed?
- The first step is to document everything.
- Document everything.
- Gather all the evidence you have, screen shots of conversations, transaction IDs, any relevant information.
(18:35):
- Okay.
And then who do you report this to?
- You can report it to the cryptocurrency exchange.
- Okay.
- Or wallet provider.
- Right.
- As well as to relevant government agencies.
- Okay.
- You can also report it to online scam reporting websites.
- Okay.
- And social media platforms.
- So even if you can't recover your funds, reporting this scam can help prevent others from becoming victims.
- Exactly.
(18:56):
- Okay.
That's a good reminder.
- And it's important to seek support.
- Support.
- Okay.
- Femmes and family.
- Family or even a therapist?
- Right.
This could be really traumatic.
- It can.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
(19:17):
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- It can be a lot of things.
- Government oversight and regulation.
- Regulation.
- Regulation of the crypto space.
- What would that look like?
- It could involve things like licensing requirements for exchanges,
- Okay.
(19:38):
- Scripture kind-cambal rules.
- Okay.
- And just clear guidelines for ICOs.
- But some people would argue that regulation stifles innovation.
- I understand that perspective.
- Right.
- I think it's important to find a balance between innovation and consumer protection.
- Okay.
- We need to create a regulatory environment
- That fosters innovation
- Yeah.
- While also safeguarding investors from fraud and abuse.
(20:01):
- That sounds like a delicate balancing act.
- It is.
- A lot of policy makers around the world are probably grappling with this.
- They are.
- They are.
- So it's about creating a crypto ecosystem
- Yes.
- That is both innovative and trustworthy.
- Exactly.
- Okay. So we've covered a lot of ground in this discussion so far.
- We have.
- But before we move on to our final case study.
- Okay.
- I want to touch on a topic that we haven't really discussed yet.
(20:23):
- What's that?
- The role of community in the crypto world.
- Oh, the community. That's an important one.
- Yeah. So how can investors tap into that power?
- Well, there are a lot of online forums, social media groups, even in-person meetups
- Okay.
- where people can connect, share, and learn from each other.
- But there are also a lot of scams.
- Yeah.
(20:44):
- And misinformation circulating online.
- Absolutely.
- How do you distinguish between legitimate sources of information
- Mm-hmm.
- And those that are trying to mislead you?
- You have to be discerning.
- Discerning.
- Okay.
- Don't just believe everything you read online.
- Right, right.
- Look for sources that are credible, unbiased, and transparent.
- Transparent, so it's about doing your research.
- It is.
(21:05):
- Not relying on anonymous sources.
- Yes.
- Or those with a vested interest in promoting a certain project.
- Exactly.
- Okay, so be critical of the information that you're seeing.
- Be crucial.
- Yes.
- If something sounds too good to be true.
- It probably is.
- It probably is.
- That's the golden rule.
- That's the golden rule for life.
- So finding a balance between being open to new ideas, but also being skeptical of claims
(21:26):
that seem too good to be true.
- Yes, it's a delicate balance.
- Okay, so we talked about community.
- Yeah.
- But let's not forget about the individual investor's responsibility.
- Absolutely.
- To protect themselves.
- To protect themselves.
- What are some practical tips for staying safe?
- Strong, unique passwords?
- Okay.
- Two-factor authentication.
- Two-factor, that's good advice for just online security in general.
- In general.
(21:47):
- But in the crypto world.
- Yes.
- And then you can get a lot higher.
- Much higher.
- Because you're dealing with real money.
- Real money.
- Right, so strong password.
- Uh-huh.
- Two-factor authentication.
- What else?
- Protecting your devices.
- Protecting your devices, okay?
- Make sure your computer and your phone have up to date, antivirus software.
- Okay.
- Be wary of clicking on links.
- Yeah, don't do that.
- Or downloading files from unknown sources.
(22:09):
- So it's all about practicing good cyber hygiene.
- Good cyber hygiene.
- Okay, what about storing your crypto?
- Ah, that's a big one.
- Where should people be storing their crypto?
- So if you're holding large amounts of crypto,
it's generally not advisable to store it on an exchange.
- Because exchanges can be hacked?
- That's right, there's always that risk.
(22:30):
- Of losing your funds.
- Exactly.
- Okay, so where should you store it?
- A hardware wallet.
- A hardware wallet.
- We mentioned that if you do time.
- Uh-huh.
- But what exactly is it?
- So it's a physical device that stores your private keys off-flat.
- Just like Fort Knox for your crypto.
- Exactly.
- If you're serious about investing in cryptocurrency,
get a hardware wallet.
- Absolutely.
- So why is investment?
(22:51):
- Why is investment, yes.
- Okay, so we've got strong passwords,
- Uh-huh.
- Device security, hardware wallets.
- Yes, what else?
- But what about the human element?
- The human element, that's a tricky one.
- How can we protect ourselves from our own biases
and our emotional impulses?
- Well, I think one of the most important things is
to be aware of the psychological tactics that scammers use.
(23:12):
- Okay, let's break that down.
- Okay.
- What are some common tactics that they use to manipulate our emotions?
- Creating a sense of urgency or scarcity.
- Okay.
- Or scarcity, right?
- They might say things like, this is a limited time offer.
- Right.
- Or only a few spots left.
- Pressure you into making a decision.
- Yes, before you've had time to think it through.
- So they're playing on our emotions?
(23:33):
- Exactly.
- And another tactic they use is social proof?
- Social proof, yes.
- What's that?
- They might create fake testimonials.
- Oh, interesting.
- Or use bots to make it seem like everyone is investing in their project?
- So they're trying to create a herd mentality?
- Exactly.
- Where people feel like they need to jump on the bandwagon.
- Before it's too late.
- Right.
- And they often use authority figures.
- Okay.
(23:54):
- Or celebrity endorsements.
- Celebrity endorsements.
- To endure with their projects.
- Even if those endorsements are fake.
- Even if they're fake.
- So it's about being aware of these tactics.
- Yes.
- And not letting our emotions cloud our judgment.
- Don't let your emotions take over.
- So even if your favorite influencer is promoting a particular coin.
- Yeah.
- You still need to do your own due diligence.
- Absolutely.
(24:15):
- And if something sounds too good to be true.
- It probably is.
- It probably is.
- That's a good rule of thumb for life in general.
- For life in general.
- Okay, so we've talked about the psychological tactics that scammers use.
- Mm-hmm.
- But I think it's important to acknowledge that some people are more vulnerable to these scams.
- Absolutely.
And I think it's important to be compassionate and understanding towards those who have fallen victim.
(24:36):
- Absolutely.
- It's easy to judge, but we have to remember anyone can be fooled.
- Right, especially if they're targeted by these skilled manipulators.
- Oh yeah, these scammers are professionals.
- Oh.
- They know what they're doing.
- They do.
- They know how to exploit people's vulnerabilities.
- And they're constantly refining their tactics.
- Constantly.
- So it's not about blaming the victim.
- No.
- It's about understanding the factors that make people susceptible.
(24:58):
- To these scams.
- And one of those factors is financial insecurity.
- Oh, absolutely.
- Right, if someone is struggling financially.
- They might be more likely to take risks.
- They might.
- Hoping to improve their situation.
- Right, scammers often target people who are desperate for a financial breakthrough.
- Okay.
- They might promise unrealistic returns.
- Yeah.
- Or offer these investment opportunities that seem impossible to pass up.
(25:21):
- So be aware of your own vulnerabilities.
- Yes.
- Be extra cautious.
- Especially when you're feeling financially stressed.
- Okay. And if you're considering making a major investment.
- Yeah.
- Maybe reach out to a financial advisor.
- A trusted friend.
- A friend or family member.
- Family member.
- Okay, so we've talked about due diligence, emotional awareness, community support.
- Yeah.
(25:42):
- But I think it's also important to acknowledge that the crypto world is constantly evolving.
- It is.
- New scams are emerging.
- All the time.
- All the time.
- It could be hard to keep up.
- So how do you stay ahead of the curve?
- It's crucial to have a growth mindset.
- A growth mindset.
- Be willing to adapt.
- To the changing landscape.
- To the changing landscape.
- And to be open enough to just learn the basics.
(26:04):
You need to stay informed about the latest trends.
- Right.
- Developments in the crypto world.
- So how do you do that?
- Read industry news.
- Okay.
- Follow reputable sources on social media.
- Okay.
- A 10 conferences webinars.
- So it's about making crypto education an ongoing process.
- An ongoing process.
- So be proactive.
(26:25):
- Be proactive.
- Be patient.
- Wait for the scams to happen to you.
- That's right.
- Take steps to protect yourself.
Now.
- Now.
- Okay.
We've talked a lot about the risks and challenges of investing in cryptocurrency.
- Yeah.
- But I think it's important to end on a positive note.
- A positive note.
- So despite the scams, the volatility, there's still a lot of potential.
(26:45):
- There is.
- There is.
- In this space.
- So it's about finding that balance between being aware of the risks, but also being excited about the possibility.
- That's it.
That's the key.
- Okay.
And how do we find that balance?
- Education.
- Awareness.
- And awareness.
- And a commitment to ethical behavior.
- From all participants in the space.
(27:06):
- All participants.
- Okay.
Well said.
- Thank you.
- So we've covered a lot of ground in this deep dive.
- We have.
- But before we wrap things up, I want to take a look at one more case study that illustrates
the human cost of these scams.
- Okay.
Let's hear it.
- This one comes from the YouTube channel, Il Cryptoverso.
They did a deep dive into the infamous Mt. Gox hack.
- Oh, Mt. Gox.
(27:26):
- Which is considered one of the most devastating events in crypto history.
- It was.
- For those who might not be familiar.
- Yeah.
- Mt. Gox was once the world's largest bitcoin exchange.
- The largest.
- Founded in 2010 by Jed McHale.
- Jed McHale.
- And it quickly gained popularity as the go to platform for buying and selling bitcoin.
- Back then.
- Yeah.
(27:46):
- The regulatory landscape was even more wild west than it is today.
- So there were very few safeguards in place?
- Very few.
- To protect consumers.
- It was a different time.
- It was a very different time.
- And that lack of oversight ultimately proved to be Mt. Gox's downfall.
- Okay, so what happened?
- Tell me the story.
- Well, things started to unravel in 2011.
- Okay.
- When Mt. Gox suffered its first major hack.
(28:07):
- Oh, no.
- They lost a relatively small amount of bitcoin at the time.
- Okay.
- But it exposed vulnerabilities in their security systems.
- And this is where the story gets really interesting.
- Oh, what happened?
- There's some evidence that suggests that the hack might have been an inside job.
- An inside job, okay.
- Some people believe that Jed McHale of himself?
- Jed McHale.
(28:28):
- Might have been involved.
- Wow.
- And remember, this is before he went on to found Ripple.
- Right.
- It's a crazy twist.
- So what happened after that first hack?
- Yeah, did they beef up your security?
- They claimed they did.
- They claimed they did.
- But the damage was already done.
- The trust was broken.
- Trust in the exchange was shaken.
- And that's fatal in the financial world.
- It is.
- The things we're about to get much, much worse in 2014.
(28:50):
- Yeah.
- Mt. Gox suffered another much larger hack.
- Okay.
- And this is the one.
- This is the one that brought them down.
- That brought them down.
- Yeah.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
(29:11):
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
(29:32):
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then they got all the data from the market.
- And then suddenly you see that same car everywhere.
- Yeah.
- You were still consciously filtering it out before.
- Yeah.
- But now your brain is primed to notice it.
- Exactly.
- It's the same with those crypto scams.
- It is.
(29:53):
- If you're convinced that you're going to get rich quick,
- Yeah.
- You're more likely to fall for a scam
that just reinforces that belief.
- Absolutely.
- Okay.
- What about the availability bias?
- Availability bias.
- That's the one where we overestimate
the likelihood of events
that are easily recalled.
- That's right. So if someone has recently heard about a friend
(30:15):
who made a fortune in crypto,
they might be more likely to believe that they can do the same.
- Right. Right.
- Even though the odds are stacked against them.
- Even though statistically it's probably not going to happen.
- It's probably not going to happen.
- It's probably not going to happen.
- It's like those lottery commercials
that show people celebrating their big wins.
- Exactly.
- They make it seem like winning is easy and common.
- Right.
- But in reality it's incredibly rare.
(30:36):
- Incredibly rare.
- Don't forget about the framing effect.
- The framing effect.
- That's where the way information is presented.
- Yes.
- Can influence our decisions.
- Even if the underlying facts are the same.
- So a scammer might frame a really risky investment opportunity.
- Right.
- As a sure thing.
- Right.
- Once in a lifetime chance to get rich.
- Absolutely.
- Making it seem less risky than it actually is.
(30:57):
- Exactly.
- It's like those investment gurus.
- Oh, the gurus.
- Who claim to have the secrets formula for beating the market.
- They're everywhere.
- They use all the fancy language.
- Yeah.
- The impressive charts.
- It's all smoking mirrors.
- It gets even more credible.
- Right.
- But often it's all smoking mirrors.
- It is.
- Okay, so it's important to be aware of these biases.
- Yes.
- And to make decisions based on logic and evidence.
(31:18):
- That's right.
- Not emotions.
- Not emotions.
- Easier said than done sometimes, right?
- It is where emotional beings.
- We are.
- But with practice and awareness, we can train ourselves to be more objective.
- Mm-hmm.
- Less susceptible to these cognitive traps.
- So protecting yourself from crypto scams.
- Yeah.
- It's not just about learning about all the different types of scams out there.
- No.
- It's about understanding how our own minds work.
(31:41):
- Exactly.
And that's what makes this topic so fascinating.
- It is fascinating.
- It's technology, it's finance, it's psychology.
- Absolutely.
And speaking of psychology.
- Yes.
- I think it's also important to talk about the role of social pressure.
- Social pressure, you?
- In these scams.
- Absolutely, especially in the crypto world.
- Yeah.
Where there's just so much hype and fomo.
- So much fomo.
(32:02):
- Scammers know this.
- They do.
And they often exploit this by creating a sense of community and belonging.
- Right.
- They might create these exclusive telegram groups, discord servers, where people can connect, share, and cider information.
- But because these groups are often filled with bots.
- Yes.
- And page show.
- Page show.
- It could be really hard to distinguish between genuine enthusiasm and manufactured hype.
(32:27):
- That's right, they create an echo chamber.
- An echo chamber?
- Where everyone is just reinforcing each other's beliefs.
- Yeah.
- And anyone who disagrees, they're quickly silenced.
- It's almost like a cult.
- It is.
- Where the leaders' pronouncements are accepted without question.
- Yeah.
- Scary.
- So how do we resist that allure?
- Good question.
- How do we avoid getting caught up in that hype?
- Well, one thing is to remember that there's not such thing as a sure thing in crypto.
(32:51):
If someone is promising you guaranteed returns or insider information.
- It's a scam.
- It's almost certainly a scam.
- What about those multi-level marketing scams?
- Oh, MLN.
- There's so prevalent.
- There's so prevalent in the crypto world.
- They're everywhere.
- How do those work?
- Classic example of how scammers exploit social preher.
- Okay.
- Encourage people to recruit their friends and family members.
(33:12):
- Right.
- Promising them commissions and rewards for building a downline.
- A downline.
- That's right.
- But the reality is most people who get involved in MLNs end up losing money.
- The only people who benefit are the ones at the top.
- Exactly.
At the top of the pyramid.
- Okay, so how can investor distinguish between a legitimate crypto project?
- Mm-hmm.
- And an MLM scam.
(33:34):
- Well, one red flag is that MLMs typically focus more on recruitment than on the underlying product or service.
- So they're more interested in getting people to sign up.
- Yes.
- And pay fees.
- Pay fees.
- Then they are in actually developing a sustainable business.
- Exactly.
- Another red flag is that MLMs often use those high pressure sales tactics.
- Oh, yeah.
(33:55):
- Make unrealistic promises.
- About potential earnings.
- So it's all about creating that sense of urgency and fomo.
- Exactly.
They want you to make a decision based on emotion, not logic.
- To be aware of these tactics.
- Be aware of your research.
- Always do your research.
- Before getting involved in any crypto project.
- Absolutely.
- Especially one that involves recruitment or multi-level marketing.
(34:18):
- If it sounds too good to be true.
- It probably is.
- It probably is.
- And there's no shame in saying no.
- No shame at all.
- If you're not comfortable with the risks involved.
- Or you don't fully understand the business model?
- Yeah.
- It's walk away.
- Walk away.
We've covered so much today.
- So much.
- But what about the future?
- The future.
- What trends do you see emerging in the world of crypto scams?
- Oh, I think one trend we're going to see is an increase in the sophistication of these scams.
(34:43):
- The scammers are getting smarter.
- Absolutely.
They're using AI, machine learning, advanced technology.
- To create more convincing scams?
- Yes.
And to target their victims more effectively?
- That's a little scary.
- It is a little bit scary.
- So it's a constant arms race?
- It is, but I think we have the advantage.
- Okay.
- We have the power of knowledge.
- That's true.
Knowledge is power.
(35:04):
- The more we learn about these scams, the better equipped will be to protect ourselves.
- Okay.
What else?
- I also think we're going to see an increase in the use of social engineering.
- Social engineering.
Now what exactly is that?
- So it's a type of manipulation that relies on psychological tricks, deception,
- Right.
- To persuade people to divulge sensitive information.
(35:26):
- Okay.
- So we have a lot of different social interactions that are not in their best interest.
- So it's like fishing, but instead of using fake websites or emails,
- Yeah.
- They're using human interaction.
- Exactly.
And it can be really effective.
- Okay.
- These scammers are very skilled at building rapport.
- Oh, I bet they are.
- And trust with their victims.
- They might pretend to be a friend or a colleague?
- They might--
- Even a romantic interest?
- Even a romantic interest?
(35:47):
- Oh wow.
- To gain your confidence.
- And then exploit that trust.
- Exactly.
And I think we're going to see a lot more of this in the crypto world,
- Okay.
- Because it's a relatively easy way to target people.
- Okay.
- And then, you know, the new to crypto.
- Right.
- Might not be as aware of the risks.
- So be cautious about who you trust online.
- Very cautious.
- And be wary of anyone who asks you for sensitive information.
- Absolutely.
(36:08):
Especially things like your private keys.
- Yeah.
Or your seed phrase.
- Seed phrase.
Never give that out.
- Never.
- And be aware of the signs.
- What are the signs?
- Pressure tactics.
- Right.
- Flattery.
Appeals to emotion.
- So use your critical thinking skills.
- Always.
- If something feels off.
- Yeah.
- Too good to be true.
- It probably is.
- It probably is.
- That's the golden rule.
(36:29):
- That's the golden rule.
- We've covered a lot of ground in this deep dive.
- We have.
We've gone deep.
- The world of cryptocurrency.
- Yeah.
- Full of opportunity.
- Yes.
- But also fraught with risk.
- It is.
But I do believe that the potential rewards outweigh the risks.
- Okay.
- As long as we're approaching the space with caution.
- Right.
- And a healthy dose of skepticism.
- So it's about finding that balance.
(36:50):
- That balance.
- Between enthusiasm and vigilance.
- Exactly.
- And education is key.
- Education is key.
- The more we learn about crypto.
- Mm-hmm.
- The better equipped we'll be to navigate this landscape.
- This complex and constantly evolving landscape.
- Well said.
- Thanks you.
- Thanks for joining us on this journey.
- Been a pleasure.
- Into the world of cryptocurrency scams.
- Yeah.
(37:11):
- Hopefully you found it informative and empowering.
- Absolutely.
- Remember, stay vigilant.
- Stay informed.
- And keep exploring.
- Keep exploring.
- The future of crypto is bright.
- It is.
- But it's up to all of us to make it safe and secure.
- That's right.
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