How To Spot a Crypto Investment Scam: If It Sounds Too Good to be True, It Probably Is

Core Insights - The cryptocurrency market is rife with scams, targeting both new and experienced investors, with various fraudulent schemes such as rug pulls and pump and dump tactics [1][2][8] Investment Guidelines - A fundamental principle in investing is that if a project promises unrealistic returns, it is likely too good to be true. Investments offering an annual percentage yield (APY) above 5% should be approached with caution [3][4] - While the crypto market can yield double-digit returns through staking and lending, these profits are not guaranteed, and responsible projects will caution that future performance may not reflect past results [4] Utility vs. Speculation - It is crucial to differentiate between projects with real-world utility and those driven by speculative hype. Understanding the source of value in a project can help in making informed investment decisions [5][6] - Projects that depend solely on speculative hype, such as memecoins, have a poor track record and often leave investors with worthless assets. Most investors can only expect short-lived gains from such investments [7] Scam Awareness - Crypto investment scams exploit the promise of easy profits to defraud investors. Common types of scams include fake projects, pump and dump schemes, and exit scams [8] - To safeguard against scams, investors should be vigilant for red flags, such as unaudited contracts and anonymous key holders [9]