The OneKey hardware wallet is about security—but some risks cannot be mitigated by your OneKey. In this section, we'll discuss common Web3 scam strategies and what to look out for as you explore this space.
Web3 Scams
In Web3, anyone can launch a project and start selling tokens—there are no business checks, no regulatory bodies, and no code of conduct for crypto projects.
More importantly, because blockchain transactions are immutable and there is no central governing entity, if you make a wrong judgment, there is no way to get your crypto back. Once it’s gone, it’s gone. That’s why it’s essential to understand the different scams in the Web3 space and how to spot them before they spot you.
Pump and Dump
A pump and dump is not a new scam—it’s as old as trading itself.
When a product or business idea is being "pitched," it means someone is promoting that idea for personal gain. In other words, they might tell you that this project is "a once-in-a-lifetime opportunity!" or "you need to buy now before it sells out!"—making you believe that this idea is a great investment opportunity. In reality, it’s not a good opportunity at all, and the only person who will profit from your investment is the scammer.
In the free and easy world of cryptocurrency, anyone can launch a project and seek your investment, and fake projects are very common.
Cryptocurrency Scams
Pricing a cryptocurrency can take several forms.
- This could mean advertising a fake project (we will come back to that).
- It could also refer to someone promoting a project in exchange for financial compensation (i.e., not impartial advice).
In either case, the idea is the same: to hype the project so that unsuspecting people like you and me will buy in.
A little hype can go a long way— the more people invest, the higher the demand for the tokens, the higher the price, and the greater the overall value of the project.
How to Spot Fake Cryptocurrencies
Cryptocurrency scams may not always be obvious. You might not always see someone say, "Hey! Check out this great token, you should invest 100% in it right now if you want to make money and save the world!" Instead, it might look like this.
- Influencers
Not all influencers are on Instagram. In the cryptocurrency space, you might encounter a figure of influence, such as a celebrity, endorsing a project.
But celebrities may not be transparent: they could be compensated for this endorsement or have a stake in the project themselves. In either case, their advice is not impartial and won’t benefit you—it is driven by self-interest.
What’s the lesson? Always ask why. When a figure of influence suddenly shifts their attention and advocacy toward a cryptocurrency—with no prior signs of interest in the market—it’s likely they’re doing it for themselves, not for you.
- The Project Founders
Naturally, the team behind a cryptocurrency project wants the project to succeed—they likely have significant stakes in it. Logically, they would hype it up to gain attention and investment.
But remember—teams have a vested interest in seeing the project succeed. So their recommendations are unlikely to be impartial.
What’s the lesson? Do your own research. If a team promises to deliver more to the world, check against their roadmap, whitepaper, and other sources like Etherscan.
Rugpulls—The Perfect Cryptocurrency Scam
Now let’s talk about another prevalent scam in the cryptocurrency space.
This scam is exactly what it sounds like: someone pulls the rug out from under you. In the context of cryptocurrency, a rugpull involves a fake project selling tokens or NFTs, promising a bright future.
As demand for the project increases, the price of the tokens will rise, and the overall value of the project will increase. The key is: the project has no future, and the creators know this when they take your money.
Price Manipulation
Once you and other investors put money into the project (with crypto being "pulled"), demand and price for the tokens will rise. Then, the creator or founder sells their own shares (the pump), inflating those shares due to all the interest demonstrated by you and other buyers.
The creators of the project never intended to stick around and give back—once they sell their shares, they bail. You and other investors are left with tokens from a project that no longer exists.
A recent example is the so-called SushiSwap (SUSHI) exit scam. The project saw a massive price increase, and its creator—an anonymous chef named Nomi—immediately cashed out $14 million. This caused the price of SUSHI to plummet from over $9 to just above $1 in less than a week. In response to significant backlash from the community, Chef Nomi eventually returned the funds. Most “rugpulls” end in such farce.
You Are the Gatekeeper
In summary, the freedoms of Web3 make it a perfect environment where almost anyone can set forth any claim they like. Even if your keys are completely secure in your OneKey, you must still conduct thorough checks on projects before you engage.
How to Avoid Being Scammed
Before you let anyone persuade you and your money to enter a project (no matter how enthusiastic they are), make sure you do the following.
- Ask yourself why someone would want to reach out to you—are they invested in the conversation?
- Never respond to private messages recommending cryptocurrency projects—there’s no reason in Web3 for anyone to contact you privately.
- Do your own research (DYOR). Gather key facts about the project rather than subjective hype.