Crypto currencies, just like cash and other digital payment are used by both people with good and bad intentions. According to a chainalysis’ 2021 excerpt, the criminal share of all cryptocurrency activity was estimated to be $10B, or just 0.34 percent. This shows that the biggest percentage of illicit financing activities and money laundering is still facilitated by fiat currencies rather than cryptocurrencies.
According to the UN, it is estimated that between 2 % and 5 % of global GDP ($1.6-$4T) annually is connected to money laundering and illicit activities. And the percentage of such criminal activities through cryptocurrencies is much smaller as compared to fiat currencies. The false narrative that Bitcoin and other cryptocurrencies are aiding Illegal activities and money laundering is neither here nor there.
This data therefore shows that crypto is neither the problem nor the preferred method of illegal transaction by criminals.
The biggest menace in the crypto space however is crypto scammers posing as partners with leading cryptocurrencies or trading platforms. Many people with little knowledge of cryptocurrencies have lost their hard-earned money to such scams. These scams, ranging from Nurucoin to numerous “rug-pulls” to tons of Ponzi schemes are all masquerading as “online cryptocurrency investments”. Crypto traders should beware of such crypto scams.
There are a lot of scammers on the internet. Learn to protect yourself
Changpeng Zhao, CEO Binance
Read also: Nurucoin Scam Mastermind Isaac Muthui Sought by Regulator
Crypto Scams in Kenya
Kenya’s ICT Cabinet secretary Joe Mucheru recently stated that Kenyans lose up to $120 million annually (equivalent to Kshs 13 billion) to online scammers.
Did you know that Kenyans lose about $ 120 million (KSh 13.7 billion) on scams in cryptocurrency? That’s a crime
Joe Mucheru, the Cabinet Secretary for ICT, Innovation and Youth Affair.
Most recently, many Kenyans are counting losses estimated at $10 million after their funds were withheld on Bitstream Circle. Bitstream Circle Limited was registered in the U.K. in November 2021, with Chinese citizen Quin Yang as its director and quickly amassed over 11,000 members from seven countries in less than four months with a promise of high daily returns of between 5 and 10 per cent.
Those who did research on Bitstream knew it was a scam and unsustainable but most people ignored the red flags with the hope of getting the high returns. These accounts are now closed and victims can’t withdraw their money. Truth to it; a fool and his money are soon parted. You can check on Bitstream circle transaction history for yourself here.
The saddest part is that this is not the only Ponzi scheme that Kenyans have fallen victim to. In the past few months we have seen Kenyans lose money to CG, IPC, SU, Novatech, StackCoin, My Royal Q, Bitfluxminers e.t.c. These Ponzi schemes are taking advantage of naive but greedy Kenyans who want to get rich quickly and steal their money. But the truth is that these schemes are not cryptocurrency investment opportunities.
At the time of writing this article a new scam called E-Ken seems to have been uncovered again.
Do your Due Diligence
The majority of Crypto investors who research cryptocurrencies prefer being arbitrage traders on p2p platforms, trading, staking, yield farming or lending on DeFi protocols or exchanges. There is no free money in crypto. Even airdrops only offer free tokens on new crypto projects to existing communities.
It’s important you learn how to identify platforms to do all these on, products like Binance, BitLipa, Yellowcard, Paxful, LocalBitcoins, Coinbase, Crypto dot com, Kraken e.t.c for example are reputable and extremely difficult to lose your hard-earned money on.
Apart from crypto trading people are earning money in the crypto space through working for companies building on top of the blockchain technology, providing legal services, UI/UX designing, Marketing, community management, communication, influencing services. They get paid for the services they offer to grow blockchain technology and cryptocurrencies.
Similar to fiat currencies, online scammers take advantage of the naivety of people when there is an emerging technology which majority of people don’t understand. As an investor interested in cryptocurrencies always do research before investing your money, audit the project’s code on GitHub, check out their website, community channels, and the team behind it. Use tools such as messari.io, coingecko and CoinMarketCap to do this.
There are scams disguised as investments in Crypto, just like in any other field as we saw with public likes and Deci
Frank Githiaka, CEO Benkiko
However, there is a group of risk-takers who go into these ponzi schemes knowing well they are online scams and their strategy is usually “go in early and exit before it falls” or “the rewards outweigh the risks”.
Avoid being the next victim by equipping yourself with knowledge before investing in the crypto space, talk to people you trust who are doing well in crypto and use available tools to check the viability of crypto projects before making your decision to invest.
Editor’s Note:
This is the first in a series of posts that will aim to equip our readers with practical skills on how to spot and avoid falling for crypto-currency scam. Stay tuned for the next article.
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