Minneapolis, MN

Beware of the common schemes before investing in cryptocurrency

Stephanie Moua

MINNEAPOLIS, MN - Cryptocurrency became the mainstream topic of media coverage in 2017 as the value of some virtual coins and tokens shot up. Due to their meteoric rise, many people became interested in investing in cryptocurrencies.

Before jumping into the crypto craze, be aware that these products are not fully regulated and could be prone to fraud and other illegal activities. Also, they do not fall under the existing federal and state regulatory framework.

With that said, before you dive headfirst into crypto, you must be aware of the common schemes happening in cryptocurrencies and the common concerns.

First of all, be aware of a fake digital wallet. It is designed to look like a real one, so it's quite a tricky scheme. It uses a unique code or private key to trick users into providing it their private key. Once the scammers got your private key, they can empty your crypto wallet within minutes, and it cannot be returned.

Pump-and-dumps are cryptocurrency transactions that happen when the price of a cryptocurrency rises and then suddenly plummets. Pump-and-dumps can happen when a "whale", someone with a significant amount of the coin, suddenly sells a significant amount of their coin. Or other collaborative participants are accumulating enough amount to affect the market price. Then, people who are unaware of this scheme will sell the cryptocurrency they bought at a loss.

Lastly, the notorious multi-level marketing scheme, some platforms are designed to attract investors by promising high returns and low risk. If you see those marketing strategies, beware because it could be a red flag not to invest your capital.

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