The rise of cryptocurrency has provided an additional avenue for people to build wealth or execute financial dealings. However, Earnity’s Dan Schatt and Domenic Carosa warn users to keep their eyes open to cryptocurrency transactions as scams have become prevalent. In 2021, roughly $14 billion were lost in fraudulent crypto activities, and the amount is expected to grow as time goes on.
One of the scams to watch out for is a pump-and-dump scheme. It is an illicit practice conducted by an individual or group that involves inflating the price of an asset to dispose of its holdings for a very high-profit margin. It begins with the scammers acquiring a considerable amount of a particular token (usually small or unknown coins) and then convincing countless people to buy in through false or misleading information. Once the price is driven up, the schemers cash out, causing the token’s value to crash.
Another scam that has become rampant is the rug pull scheme. It occurs when a developer scratches a proposed project and keeps the funds it has raised from buyers for itself. Early buyers are the typical target of this scam, as they are led to believe that they are getting early access to a rising cryptocurrency.
Crypto buyers also have to be cautious of new cryptocurrencies with hidden fees. For example, many cryptocurrencies nowadays are linked to smart contracts, which require basic knowledge of computer coding to write and read. But because most people cannot understand what is included in a smart contract, bad actors can take advantage by incorporating clauses that could entail users pay exorbitant resale fees to the cryptocurrency developer.
Earnity seeks to help users gain access to crypto and decentralized finance (DeFi) assets by building a one-stop-shop crypto marketplace. Executives Dan Schatt and Domenic Carosa and the company’s team of fintech veterans understand the importance of security, having firsthand knowledge of what sophisticated digital fraud and theft look like. Their experiences are instrumental in the company’s drive to build Earnity with a security-first mindset.