From scam tokens to fake initial coin offerings (ICOs), many fraudulent cryptocurrencies and new crypto projects exist. It's important to be able to recognise them and avoid them, to keep your funds safe in Best Wallet.
Learn about the most common fake token scams, how they operate, and what to do if you've bought or been sent a fake token.
Scam Tokens
Scammers create fake tokens that resemble legitimate ones and list them on decentralised exchanges. They might airdrop these tokens to public addresses to create a buzz. Unsuspecting users might buy these tokens, thinking they are investing in a new, promising project.
Prevention Tips
Verify the contract address of any new token against trusted sources. Legitimate tokens will have well-built websites and lots of information including a proper whitepaper, and are often viewable on blockchain explorers or websites like CoinMarketCap.
Be sceptical of unsolicited airdrops or tokens appearing in your wallet. These are often scams or worthless but will try to get you to buy more or advocate the token online.
Search online and on X (formerly Twitter) for general community reception. Often, big crypto accounts will tweet warnings about common crypto scams.
Fake Initial Coin Offerings (ICOs)
Fake ICOs lure investors with the promise of high returns through a new cryptocurrency project. However, the project is often non-existent or just a shell of a token, and the collected funds are stolen by the founders/scammers.
Prevention Tips
Verify the legitimacy of the ICO through multiple sources, including industry experts and trusted community forums.
Read the project's whitepaper thoroughly and assess the feasibility of the business model.
Check for a clear roadmap, realistic goals, and a transparent team. Understand that there is an element of risk to any crypto ICO purchase, but by doing your due diligence you can avoid the fake ICOs.
Rug Pull Scams
Rug pull scams occur in crypto where developers create a new project or token, hype it up to attract investments, and then withdraw all the funds from the liquidity pool, leaving investors with worthless tokens. Rug pulls often run extensive presales, where users can buy the tokens for low prices and then claim them later.
Prevention Tips
Investigate the project's developers, their history, and their reputation. Check their website and their whitepaper for any clear indications that it might be a scam.
Look for audited contracts and transparent, active communication from the project team.
Diversify your investments to minimise risks associated with new projects. It's always good practice to do test transactions of projects, to see how it works and whether you can sell/claim your tokens.
Best Wallet partners with trusted presales and token launches, carefully vetting these projects to ensure their legitimacy. This offers a safe way to buy into new and exciting presales — you can see them listed on the Apps page of your app.
Honeypot Scams
A honeypot scam in crypto is a deceptive practice where scammers set up a trap to lure investors into buying tokens that seem promising but are impossible to sell. The scam typically involves creating a new cryptocurrency token and listing it on a decentralised exchange at an attractive price.
However, the catch is that the smart contract of the token is designed so that it only allows purchases and not sales, or it imposes exorbitant fees on selling, effectively trapping the investor’s funds.
Prevention Tips
Research thoroughly before investing in new tokens. Look for reviews, community feedback, and the project’s whitepaper.
Test liquidity by trying to buy and sell small amounts of the token before investing a significant sum.
Check the smart contract of the token for any functions that restrict selling or impose unusual conditions.
Use trusted platforms and tools provided by Best Wallet and Best DEX to analyse token contracts and trading history.
Pump-and-Dump Schemes
Pump-and-dump schemes involve artificially inflating the price of a cryptocurrency through misleading or false statements (the "pump") and then selling off the overvalued tokens to unsuspecting buyers at the peak (the "dump"), leading to a price crash.
Prevention Tips
Be sceptical of sudden, unexplained surges in a token's price or volume.
Avoid making investment decisions based solely on social media hype or celebrity endorsements.
Research the token's market history and fundamentals before investing.
Use Best Wallet and tools like CoinMarketCap to track real-time market data and avoid impulsive trades.
Dust Attacks
Dust attacks occur when an attacker sends tiny amounts of cryptocurrency (dust) to a large number of addresses. Due to the minimal value of these transactions, they can easily go unnoticed. However, the intentions behind these attacks can be malicious and harmful:
For Account-Based Assets: In these cases, the dust might come with transaction details that include malicious links. Unsuspecting users who check the transaction details might click on these links, leading them to malware-infected sites, phishing platforms, or unwanted advertisements.
For UTXO-Based Assets: Here, the attacker's strategy involves sending dust to various addresses to track the movement of these small amounts. These UTXO-based assets (unspent transaction output) help track and uncover the identity of the wallet's owner and the other addresses they control, compromising their privacy and security.
Prevention Tips
Regularly monitor your wallet for unexplained, tiny deposits.
Avoid clicking on links in transaction details, especially for transactions you don't recognise.
Check all your transactions in Best Wallet via the "Transactions" tab to keep a careful record of all your crypto activity.
Use Best Wallet's tools and resources
To ensure your crypto funds always remain safe, it is important to do the following:
Stay Informed
Best Wallet actively communicates with its users and provides important information regarding scams, updates, and best practices through its social media channels.
Make sure to follow Best Wallet on platforms like X (formerly Twitter) and Telegram. By keeping up with Best Wallet's social media updates, you can stay ahead of potential scams and be informed about the latest developments and security measures.
Additionally, ensure that you follow the official, verified Best Wallet accounts to avoid misinformation and phishing attempts disguised as legitimate sources.
Report Suspicious Activity
If you encounter a scam or suspicious activity, first report it to Best Wallet's support team. Next, you can report it to your respective country's police service, as they will most likely have cyber fraud departments.
You can also flag any suspicious activity in the Best Wallet online communities, including Telegram, Discord, and X. Doing this and highlighting any wider crypto scams can help protect others in the Best Wallet community.
Utilise Best Wallet's Educational Resources
Best Wallet offers guides, articles, and support documents to help you navigate the crypto space safely. These include step-by-step guides on how to safely transact your crypto through Best Wallet, as well as educational articles on the best crypto security practices.
Additionally, educate yourself about common scams and learn how to protect your assets effectively. As you have full ownership of your crypto funds, you must exercise caution and diligence when using your Best Wallet.