What is it and 5 ways to avoid it

Important takeaway meals

A backdraw is a crypto scam where developers abandon a project and leave with the investor funds.
Invest in a sound project by conducting the necessary caution in the project team, to assess project liquidity, assess the project promises and marketing.
Avoid a carpet -pull by avoiding projects built on hype, engaging in project communities and using reliable platforms.
If you are trapped in a Carpet Trek, users must assess losses, go out quickly, report the scam, join the community efforts and learn from the experience.

When investing in cryptocurrencies, investors face different risks, one of which is called ‘Tapy Pulls’, which is the hardest to experience. According to Solidus Labs, more than 117,000 scam marks were deployed in 2022, which was a 41% increase over the previous year. This means that about 15 new scam signs are detected every hour.

This article will explain what the carpet draws mean in crypto, how these scams work, and discuss five essential strategies to help an investor avoid the victim of such fraudulent schemes.

What is a crypto carpet in crypto?

A crypto tract refers to a fraudulent maneuver where developers of a cryptocurrency project quickly withdraw all funds from the liquidity pool, causing the value of the sign to collapse and leave investors with worthless assets. This type of scam has become increasingly common in the fast, relatively unregulated crypto market, attracting unsuspecting investors with promises of high returns and innovative projects.

Carpets are a popular tool to cheat due to the decentralized nature of cryptocurrencies, where anonymity and a lack of supervision can protect bad actors to be liable. Many high -profile cases have resulted in significant financial losses over the years.

Investors may lose millions of dollars in minutes as the value of the hooves drops to zero. The large scope of these losses highlights the importance of caution and caution in the crypto space, and emphasizes the need for investors to investigate projects thoroughly before committing their funds.

How carpet pulls work

To better understand the severity of a carpet, you can propose a new carnival opening in a town that offers rides, excellent food and quality entertainment. Everyone in that city gets excited to experience the carnival because of his promise. As a result, the city buys tickets in advance. However, the organizers disappear on the day of the carnival with all the ticket money and leave only an empty field on the day of the event. This depressing situation is comparable to a carpet in the cryptocurrency space.

But before we understand how carpet draws, let’s understand two common types of carpet draws:

LIQUIDITY VIEWS: Imagine the previous example, imagine that there is a hockey where people exchange their tickets for signs that can be used to buy games and rides. To ensure that everyone can exchange their signs for tickets if needed, the stand has a significant amount of cash. The owners of a cryptocurrency project suddenly remove all the money from this cubicle in a liquidity, making the carnival signs useless. Those who trusted the cage lost their money because they left with signs that they could not exchange. Dump and pump schemes: Imagine there is a rumor that the carnival offers a ride that will be more exciting than the rest, and everyone rushes to buy extra tickets for the ride. But as you found out, the carnival was a scam, and this rumor spread by the promoter of the ride was also a method of selling tickets at peak prices. Similarly, in the crypto space, scammers blow the price of the crypto to spread hype and false information (“pump”) about its growth. As soon as the crypto considered, the price increases and scammers sell greatly at high prices, leaving investors with fast valuable overvalued assets.

Tactics used by scams to attract investors

Scammers are like cunning carnival barkers using different tactics to move in unsuspecting participants:

‘Step up and double your money’: they promise high returns and attract with such prospects. Hype and buzz: via brilliant ads, false approval, and social media chatter, generate their enthusiasm. Limited time offers: “Just accessible now! Move fast!” Urgency forces people to make snap decisions. False credentials: Creating false confidence through the use of pseudonyms, official websites and false approval. Early success: To encourage more individuals to invest, show early success stories or initial high returns.

5 ways to avoid crypto -carpet

There are different ways to avoid crypto -carpet -draws including:

1. Do thorough research

An investor can start by seeking information that developers encode the investment with verifiable identities and credible records. Users can avoid projects where the team is anonymous or has a history of failed projects.

Second, investors must read the white paper carefully to understand the project’s goals, technology and economy. Legal projects will have clear, detailed documentation. After this, they can look for third-party security audits and code reviews.

A transparent project will undergo and publish independent security assessments to ensure that the code underlies the smart contracts and is safe.

2. Beware of hype and fomo

Users should take a moment to sit and think critically. Users should be skeptical about projects that promise guaranteed returns or ambitious timelines. Sincere projects usually offer realistic expectations and clear road maps. Investors must later understand that they should not just rely on social media or influencers.

Inflators are often paid to promote projects without real substance behind the blockchain. Focus on the project’s technology, use case and development progress. Make sure the project has a working product or a clear path to achieving its goals.

3.. Seek community involvement

Investors should look to participate in forums, telegram groups or disagreement channels. Sincere projects have active and involved communities on various social media platforms such as Reddit and YouTube.

Note the quality and frequency of interactions. A robust and supportive community and regular updates of the team are good signs. Reliable projects are open about their progress, setbacks and future plans. Regular updates and transparent communications from the team are essential.

4. Diversify your investments

Investment diversification is also a tactic to avoid carpet draws. One can balance a portfolio between more reliable, established cryptocurrencies such as Bitcoin and high-risk companies with high reward by giving different risk profiles different priorities. This strategy can ensure that the overall impact on a portfolio is minimized, even if one investment fails.

5. Use reliable platforms and wallets

Users must adhere to well -known and established platforms with a record of security and reliability. New platforms can offer attractive features, but pose higher risks. Also, perform the required and thorough research before using.

In addition, users can choose to increase security by turning on features such as 2FA. This is nothing more than an extra layer of protection against unauthorized access.

Common red flags – how to tell it can be a carpet pull

If you want to invest in more risky projects outside the mainstream blockchains such as Bitcoin and Ethereum, the general red flags that immediately have to make a Spidey feel that the project is not reliable:

Anonymous team: Projects where developers remain anonymous or use pseudonym without any verifiable background information.
Lack of transparency: Absence of clear, detailed information about the project, such as a white paper, road map or tokenomics.
No Closed Liquidity: If the project does not have a mechanism to close liquidity, which makes it easy for developers to quickly withdraw funds.
Unrealistic promises: Claims of guaranteed high returns or too ambitious project milestones that look too good to be true.
Aggressive Marketing: Excessive hype on social media or aggressive promotional tactics without material development.
Poorly written code: A lack of third-party audits or security judgments of the project’s smart contracts.

Example of a carpet draw

Onecoin, a cryptocurrency ponzi scheme, cheated $ 4 billion investors by promising high returns and legitimacy. Founder Ruja Ignatova disappeared in October 2017 and is now on the ten most sought after list of the FBI, with up to 20 years in prison if convicted.

Ignatova deceived victims by marketing OneCoin as the ‘Bitcoin Killer’, while the company sold course material and did not have a real blockchain, but rather trusted in a SQL server. After her disappearance, her brother Constantin Ignatov took over, but was arrested in 2019 and pleaded guilty to fraud and money laundering.

What to do if you get caught up in a ‘carpet’?

Despite the best efforts, carpet drawings can still take place due to technological advances and the ingenuity of hackers. If an investor is a victim of a carpet pull, the victim must:

Rate the situation

First, evaluate the extent of the losses and collect as much information as possible about the scam. Document all transactions and communications associated with the project.

Cut your losses

Leave the remaining positions quickly to save what you can. The value of the sign can drop quickly, so acting quickly can reduce losses.

Report the scam

Report the incident to relevant authorities and platforms. Inform the exchange or wallet service used and regulatory bodies, if applicable,. It can help to raise funds and prevent future scams.

Join community efforts

Processed with other victims and participate in efforts to raise awareness. Collective action can sometimes lead to legal measures or community -driven solutions to the scam.

Learn from the experience

Reflect on the incident to understand what went wrong and how to avoid similar situations in the future. Use this experience to improve practices and investment strategies so that you will not be in this situation again.

Conclusion

To understand the volatile world of cryptocurrencies, we areguaging vigilance and informed decision making. Extracts are one of the most serious threats and risks, which can have financial losses for unsuspecting investors. If you understand what a carpet draws, recognize the red flags, and use strategies such as thorough research, avoid the hype, involve the community, diversify investments and use trusted platforms, you can significantly reduce your vulnerability to such scams.

Finally, if one wants to invest in the crypto market in some way, but it is all too boring to ensure safety, it is encouraged for that individual to buy cryptocurrencies from a reliable scholarship such as crack or coinbase. Finally, the individual must learn to inhabit himself in a non-cultivation wallet.

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