How to Identify Scam Fake Tokens?

Bittime - Behind the euphoria of crypto developments, there is a serious threat that investors must be aware of: fake tokens. So, this article will discuss how to identify fake tokens that are scams. Want to know how? Keep watching, OK!

These scams are becoming more prevalent as the popularity of digital assets increases, leaving many people with significant financial losses. Here, we will understand how this scam works, real-life examples, how to identify fake tokens, and steps to protect yourself.

How Do Scammers Use Fake Tokens?

Fake token fraud is a strategy where malicious actors create tokens that imitate legitimate cryptocurrencies. The goal is to deceive investors and traders into believing they are buying or trading genuine assets. 

Here are some ways scammers use fake tokens:

1. Initial Coin Offerings (ICOs) and Token Sales: 

Scammers launch fake ICOs or token sales, luring investors with promises of revolutionary projects. After raising funds, they disappear, leaving investors with worthless tokens.

2. Airdrops dan Giveaway: 

Fake tokens are often distributed through airdrops or giveaways, where users are asked to provide personal information or pay a small fee to receive the tokens. This could lead to further fraud or identity theft.

3. Pump and Dump Schemes: 

Scammers may artificially increase the price of fake tokens through coordinated purchases (pump) and then sell their holdings at the peak (dump), leaving other investors with assets whose value has fallen.

4. Launchpool Token Scams: 

Scammers take advantage of promotions of new tokens by trusted platforms such as Binance. They claim to be able to offer these tokens at a discount through unofficial channels, tricking investors into buying fake tokens.

Real Example Case of Fake Tokens

Real cases often provide valuable lessons in identifying and avoiding fake tokens. Here are some examples:

BOOM 

In July 2024, the Binance Risk Intelligence team identified an asset called BOOM as a fake token. This token shows some suspicious signs, such as low liquidity ($3.38K) provided entirely by the contract creator and 100% sales tax. 

This means any token sale will be fully taxable, and the seller will not receive any funds. These tokens were distributed to over 11 million addresses, a tactic used to trick users into thinking these tokens were legitimate.

Fake OMNI

In 2024, several fake tokens appeared imitating the OMNI token promoted through Binance's Launchpool program. Fraudsters use unofficial channels such as Telegram or WeChat groups to sell fake tokens at attractive prices before the official launch. 

These fake tokens typically have zero value in on-chain price and market capitalization metrics, and have only a few holders and transfers in total.

How to Identify Fake Tokens?

Identifying fake tokens requires vigilance and knowledge of several key indicators. Below is the explanation.

Contract Address Verification

Each digital token has an associated contract address. Be sure to obtain the contract address from an official source such as the project's official website. 

Contact addresses can also be opened via verified social media accounts or leading cryptocurrency listing platforms such as CoinMarketCap or CoinGecko. Cross-check the contract address across multiple official sources to ensure consistency.

Use a Risk Assessment Tool

Contract code analysis, swap analysis and liquidity analysis are the basic methods for detecting token risk. Users less familiar with the technical aspects of digital assets can use consumer tools designed to help assess risk probabilities, such as the easy-to-use Token Sniffer.

Stay Informed with Risk News

The best way to reduce the risks associated with fraud in the crypto space is to stay up to date with the latest developments in the industry. Following blogs dedicated to risk and security news will help you become better at identifying red flags and avoiding scammers.

Conclusion

Fake tokens are a significant threat in the cryptocurrency space. This form of fraud takes advantage of investors' enthusiasm and their desire to explore new opportunities. 

By staying informed, doing thorough research, and being careful, you can protect yourself from falling into the trap of these scams. Always remember the old adage: if something sounds too good to be true, it probably is.

Such is the discussion about fake tokens. Hopefully with this article, you will be more alert and avoid fake tokens fraud in the cryptocurrency world, okay?

How to Buy Crypto on Bittime

You can buy and sell crypto assets easily and safely via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also ensure you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. Study Complete Guide How to Buy Crypto on Bittime. 

Monitor graphic movement of Bitcoin (BTC) price, Ethereum (ETH), Solana (SOL), and other cryptos to find out today's crypto market trends in real-time on Bittime.