Spoke to a client today who said he invested 100k into a project that turned out to be a scam.
Please, always do good research before you invest large amounts into any crypto projects.
These are some common red flags that are easy to recognise:
Here are 10 red flags to watch out for when evaluating a crypto project that could be a scam:
Anonymous or Unverified Team: The project’s team members are not publicly known or lack verifiable credentials. Scammers often hide their identities to avoid accountability.
Lack of Clear Use Case: The project has no real-world use case or value proposition, often using vague language or buzzwords without a clear explanation of how it solves a problem.
Unrealistic Promises of High Returns: The project guarantees or promises extremely high returns with little to no risk. This is a common tactic in fraudulent schemes.
Poorly Written Whitepaper: The whitepaper is either missing, full of technical jargon without substance, or poorly written with no clear roadmap. A legitimate project will usually have a comprehensive, clear whitepaper.
Lack of Transparency in Tokenomics: The token distribution and allocation are not transparent, or a large percentage of tokens are held by the team, leading to the risk of price manipulation or "rug pulls."
No Working Product or Prototype: The project has no working product or prototype, just a promise of future developments. Legitimate projects often show at least a minimal viable product (MVP) early on.
Aggressive Marketing and Celebrity Endorsements: The project relies heavily on aggressive marketing tactics, paid shills, or celebrity endorsements without focusing on actual technical achievements or development progress.
Unregulated or Unsupported by Reputable Exchanges: The token is not listed on any reputable exchanges, or it is being traded on obscure, unregulated platforms only. Legitimate projects often seek listing on trusted exchanges.
Discord/Telegram Full of Hype, Not Information: The community chatrooms are filled with hype and vague promises rather than answering technical questions or providing meaningful updates. Moderators might ban users for asking critical questions.
No Audit or Security Reviews: The project has not undergone a reputable third-party security audit, especially if it involves smart contracts or DeFi (Decentralized Finance). Lack of audits leaves the project vulnerable to exploits.
Being cautious and conducting thorough research before investing in any crypto project can help protect against scams.
