A new type of scam has emerged in the hype-filled world of cryptocurrency: the 'rug pull.' Here's a closer look at the scam and more of the week's best money reads.
The scam, which gets its name from the expression"pulling the rug out," involves a developer attracting investors to a new cryptocurrency project, then pulling out before the project is built, leaving investors with a worthless currency. It's part of a long history of investment schemes.
People are also reading… Investors can protect themselves by choosing established cryptocurrency projects, making sure the code of any new project has been reviewed and verifying the developers' identities. If you're struggling to break through the hype, one way to find established projects is to look at centralized exchanges such as Binance, Coinbase and FTX. While the presence of a cryptocurrency on a large exchange is by no means a guarantee of its quality or investment potential, these businesses often will review assets before listing them for sale.
KNOW THE CODEThe fate of any investment in cryptocurrency or blockchain projects rests on the integrity of the project's computer code. You may not be a computer programmer, but you should at least understand how a product works before investing in it. But even if you do your homework, there's no guarantee of success. For example, the founder of Rugdoc.io, a service that reviews new projects, says she wound up getting scammed herself on an NFT that was supposed to be a ticket for an event.
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