
Scamsters have defrauded thousands of people of an estimated Rs 200 crore across Himachal Pradesh by promising high returns in a short period through investment in crypto assets.
The gang's kingpin, who is yet to be arrested, used a Ponzi scheme strategy to lure people and also manipulate the prices of the cryptocurrencies they used to swindle money from investors.
The police said scamsters launched new cryptocurrency assets and jacked up the prices of these digital currencies, a rug pull in the crypto world.
What is the reason for pulling a rug?
A rug pull is a cryptocurrency scam in which companies of a new cryptocurrency project stop the project and take investors' money. Investors may lose their tokens through various ways, such as disappearing with liquidity, disabling the project's website and social media accounts, or making it impossible for them to sell their tokens.
The value of tokens is plummeting due to fraudsters dumping their own tokens on the market.
Rug pull is derived from the English phrase, to pull the rug out from under someone, means to remove support to somebody suddenly.
Rug pull is a significant problem in the cryptocurrency sector, with billions of dollars lost annually to such scams. A recent report by Chainalysis revealed that rug pulls had a net worth of more than 36 percent of all cryptocurrency scams in 2021.
How do you avoid being a victim of a rug pull? To be a watchful crypto investor, you need to be aware of a few things.
Be sure to do your research and understand what the project is trying to accomplish before investing in any cryptocurrency project. Have you seen the team behind the project and beware of their track record?
Be wary of projects with high returns and low risk. If a project boasts high returns with little-to-no risk, it's probably a scam. There is no such thing as a certain investment in Cryptocurrency, which is a volatile asset class.
Beware of projects that are highly hyped on social media. Scammers frequently use social media and other platforms to get the ball rolling on their projects. If you are being promoted without any substance behind it, beware of it.
If you have a high risk tolerance, invest only what you can afford to lose. Cryptocurrency is a risky investment, so invest only what you can afford to lose.