With a high demand for cryptocurrencies and an evolving space, there has been an increase in related scams. It is important, therefore, for investors to save themselves from fraudulent crypto exchanges and tokens.
Every investor or non-investor is a target for fraudsters who are looking to make some easy profits by exploiting individuals who would do anything to get rich instantly.
Cryptocurrency price swings have been wild in the recent past with Squid Game-based coin SQUID, Kokoswap, Ethereum meta surging up thousands of percentage points in just hours. Many tokens have seen massive fall as well leaving investors trapped.
Shashi Prakash Jha, head of legal and compliance at WazirX, said, “Crypto has gone mainstream, and while we are experiencing increased participation from the youth, retail and corporate investors, we understand the responsibilities that come while trading in a high-risk asset class.
Every investor or non-investor is a target for fraudsters who are looking to make some easy profits by exploiting individuals who would do anything to get rich instantly."
A simple way to identify a token is a scam or not is to see whether the investment scheme is promising unrealistic returns within a short period.
“One more way to identify a scam token is if scammers promising crypto giveaways ask investors to send them a few coins for validation of address.
Another way is hacked or spoofed social media handles of well-known personalities promising instant doubling of crypto sent," Jha said.
Further, it is very important to invest after doing the due diligence on a project, look up their whitepapers, (who follow know your customer and anti-money laundering guidelines), the background of the founders and the quality and reputation of the exchange their customer support infrastructure before investing.
Currently, India doesn't mandate any specific AML/CFT norms for crypto exchanges. However, all stakeholders voluntarily follow the c recommendation on VASPs.
The exchanges also engage with both states, Central and international agencies in sharing and establishing international best practices on AML/CFT. Source.