Encryption scams have always existed.Avoid being pulled by these tips

After the pandemic, cryptocurrencies have attracted the attention of the world, and notorious scammers have also noticed this. With the increasing popularity of altcoins and meme tokens, new crypto scams will appear on Telegram.

What is a scam?

Scam, pull the carpet, you can think of it. They are everywhere: Telegram chats, groups, fake communities. But what exactly is carpet tension? Next level.

This happens when a developer creates a token paired with a valuable cryptocurrency, lists the token on a decentralized exchange (DEX), and then withdraws all funds.

In short, when a developer abandons the project after cashing in on the investor’s capital, an encryption carpet pull occurs.

According to Gizmodo, considering the recent “Squid Game” scam, the developer created a “play to make money” SQUID token, which attracted buyers, raised the price, and made a profit of 3.38 million U.S. dollars.

How to find the carpet tension?

Although experienced scammers can create carpet pull, if investors pay close attention to the following signs, it is easy to spot them.

Low liquidity

Low liquidity means that it is difficult to convert tokens into cash because developers have limited funds to create tokens. When liquidity is low, it is easier for developers to manipulate the price of tokens. The best way to check liquidity is to look at the 24-hour trading volume, which should account for at least 20% to 40% of the total market value of the token.

Low TVL (total value lock-in)

TVL refers to the total amount invested in a specific project and is a reliable indicator for checking the authenticity of the project. A legitimate project requires billions of investment, and a scam project may cost hundreds of dollars.

How to avoid carpet pulling?

Here are some tips to avoid pulling the carpet and exiting the scam

Read the document

Every project should usually have a white paper to provide investors with information about the concept, purpose, and technology behind the project. The carefully drafted white paper provides legitimacy and professional prospects for the project. Poorly written or plagiarized white papers are offensive and are regarded as red flags.

Follow social media channels

Fraud tokens may often have basic, low-traffic websites and social media channels created recently. At the same time, the most successful projects will be active participation, investor outreach and community involvement. Will be actively updated on platforms such as Twitter, Telegram and Discord channels.

E.g, commune It is an encrypted messenger used to verify the legitimacy of the project and keep investors in a safe place, can access KYC, charts, audits, reports, market value, and allow investors to contact valuable projects.

use tools

There are some online tools that can detect the tension of the carpet, such as Token sniffer with Carpet DocumentFor high-level fraud detection, Etherscan or Binance Smart Chain explorer can help users evaluate the legitimacy of the project. However, browsing through different applications is very time-consuming, and information is always limited.

Closing Ceremony

As the encryption industry has grown and attracted a lot of attention, carpet pull has become common in DeFi, and to some extent, it is also popular in NFT. Most of these scams are carefully planned, intensive marketing, and excellent execution.

By following the prompts, conducting due diligence and conceptual research and analysis of potential projects, you can reduce the chance of being pulled. Be a smart investor, not a greedy person!

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