By Cem Kumlar on The CapitalIf you think that you are not susceptible to being scammed and that you have the distinct knowledge of filtering out the scams or people with bad intentions I have some bad news for you. You will be scammed at some point during your journey in the crypto industry. It’s inevitable and will happen sooner or later. A bombardment of scams will come your way from the second you start in the crypto business. At some point, your defenses will hopelessly fail and you will fall for it. So be prepared to lose money.Unfortunately the crypto industry currently still is a bit like the wild wild west. Gold is to be found and outlaws are on every corner. The big difference with the wild west is that there are no sheriffs in Cryptotown. There are no laws to protect you either so it really is free game for all. However, there are certain gradations to scams.The easiest to intercept are the “Private message” scams. Although crypto is fairly anonymous you will be using services like Telegram to join groups or communities. This makes you vulnerable from the start because your pseudo crypto usernames will be out in the open for anyone willing to look for them.And finding them is easy if you have some programming skills. A telegram scraper is built in a matter of minutes and within a blink community with thousands of members get added to a scraped database full of potential victims. If you enter a group to ask for help it's even more appealing because your helplessness is what attracts them. The direct messages will poor in.The scammer will start to connect with you on a seemingly personal level. Usually starting with something like “Hi Sir/Madam, are you acquainted with crypto?” or “All my life I have been looking for ways to invest in cryptocurrency/bitcoin and have failed till I met Mr. John Doe who now trades or helps me earn $100 every 3 days…Contact…” And quickly they will offer you the best bargains or to double your investment. Needless to say, the bargains are meant to lure you to their scam site and the doubling of your investment will never ever result in your investment being doubled.Rule of thumb to protect yourself against these scams is to never continue talking with a person as soon as the offer is for you to spend money.Don’t get me wrong, Telegram is a great way to connect with people but be aware that 9 out of ten people will try to scam you. Sometimes people will offer you a website address to visit and register. If you consider doing this first google the website before joining.These direct message scammers are usually easy to filter out for an experienced person. However, a starter could easily fall for these and this would result in a bad first time crypto experience. Which is unfortunate because crypto should be open for everybody to enjoy.The next step in scams quickly becomes a lot harder to distinguish. Note how different factors add to the level of professionalism of certain scams. You also need to take into account the difference between a scam on a personal level or towards a crypto company.On a personal level, you’ll quickly get into the domain of the so-called High Yield Investment Programs or HYIP for short. They may also be called Bitcoin Doublers. Usually, they offer something like 5% Hourly ROI or 33% Daily return. Or invest 1btc and get 5btc in return within 7 days. For a newbie, these sites usually look very promising and professional. I recommend staying away from anything that offers you even .1% guaranteed return. The market is volatile to be able to guarantee you anything.If you haven’t heard of any HYIP’s or Bitcoindoublers, I’d recommend looking commencing a google search.Next in line are the very well known CLOUD MINING Scams.Bitcoin doubler scamsCryptocurrency mining is a very specialized crypto activity which requires quite an involvement of financed funds and technicality before you can even yield any substantial profit. If you consider starting mining now you probably too late anyway. I wouldn’t consider it as there are people using systems and networks way too powerful for you to actually be able to yield any profit.However, newcomers are being promised fixed returns for investing in certain mining programs or platforms. More often than not it’s a cloud platform which resorts to the use of edited images, promises of big profits, and fake testimonials to convince you to part with your coins. They run a couple of months (as long as the investments poor in). During that time they pay you a percentage of the earnings from other poor souls that have invested so you will think it’s legitimate and probably will re-invest your earnings to make even more profit. And after a couple of months, when they reach a point of maximum advantage, they will simply disappear from one day to the other. Along with your money.These scams are known to have raked in millions at a time before pulling an exit-scam.ICO SCAM AHEADNext in line are the ICO crypto scams. Usually harder to distinguish from the genuine projects and very appealing for crypto newbies. These projects are known to have gathered billions in profit for the scammers which is absurd if you consider that genuine projects usually have a hard time even reaching their soft-cap.There are a few indicators that you can use to determine the scam value of the project for yourself.The project claims to have an independent blockchain and promises to be better than bitcoin.Real information about the project usually is hard to find, if any information is to be found at all.Purchasing and trading can only be done on their own platformContacting anyone from the company is nearly impossible. All you get is representatives, community managers, chat support agents and so on.The company has no real history. It’s suddenly around stating it has paid members millions in profit already.The registration of the said company is done in the UK (or countries that are known to harbor shady businesses) to look professional and legitimate but no details on revenue or people working there can be found.The only value for the project is created by the project within the project. In crypto terms this means that there is no real “use case”. You cannot trade it and thus the value is only given through the website of the project itself.Social media accounts of these projects usually spend much time on promoting teams and members but hardly spend time on answering real questions.The teams of these projects either use fake profiles or use profiles of so-called “catfish”. People who pretend to be part of the project against a fee.Perhaps the promise of big fortune for everybody who joins the project is another red flag.Another type of scam is the software scam.After some time active as a trader on the crypto exchanges you might want to automate the process a bit to make a bit more profit so you will start looking for automated trading. What you will find are the so-called “trading bots”. The first couple you check are the legit ones but they ask a considerable amount of money. Then your eye catches the cheaper ones that seemingly are well working too.What you forget is that these scammers have set up whole fake communities with fake reviews to promote their product. And by the time you figure out you have purchased a shitty bot, the website where you purchased the bot is not available anymore.You’ll realize you lost another considerable amount of money as not only did the bot cost you but also the bot did undefinable trades which resulted in big losses. I suspect these bots have been secretly programmed to pump prices of shit coins so the scammers can sell their bags at highest point.Scams I have encountered while running Libereum have a slightly different approach. The main reason for this is obviously the fact that whenever you try to scam a crypto company you are in contact with people who understand the blockchain and know about most active scams.But this doesn’t stop the scammers from trying. The scams that I encounter on a daily base usually are the following:Community building scam. This may cost you the smallest amount of learning money but it’s frustrating nevertheless. Usually, people claiming to be experienced community managers will offer you to work for them for a fee anywhere between 100 USD to several thousand USD. They then will grow your community with fake users and claim to have done what was asked.A tougher one to intercept are the so-called “ICO Advisors”. You will find hundreds of these on Linkedin with seemingly huge followings but after getting paid for their efforts the results are absent. They have various reasons for not showing any results. They blame the project for being not interesting enough for investors, or the bad time for the crypto market or anything ranging from the weather to not being able to promote your project due to another project being prioritized. These types of scammers usually will cost you between 5k and 25k. Don’t be fooled by their professional look, scamming is their core business.More often than not you will get contacted by so-called “Listing managers” or a variation on this. These people claim to have connections with different exchanges and can get your project listed on said exchanges. For a fee, of course. After paying the fee for listing they cease to exist. The exchange that is used to lure you in knows nothing about any deal and your money is lost. On average, these scammers will ask around 1BTC for their services.Whitepaper writers who will offer you to either rewrite your whitepaper or translate it into x language. I once did this and when I received the rewritten whitepaper it was literally a totally different project altogether. And the “writer” blamed me for not giving him enough source material. Count on a loss of anything between 1 and 7 ETH.Software scammers. They will offer you great ICO software or to develop and program your website, blockchain or app. After months of development, nothing has happened yet and you realize the mistake you made cost you another 25–50k USD.Purchase scam. Usually, during an ICO or Tokensale, you will get contacted by some individuals supposedly representing a large group of investors. These people seemingly want to purchase a large amount of your token at a better rate due to the fact that they purchase in large quantities. You need to show them you are legit by transferring the tokens prior to purchase or through a so-called “escrow” service. They will convince you doing so by showing wallet addresses they supposedly own with a large amount of BTC or Eth in them. To gain trust they will ask you to send a small part of the transaction first, like 10% of the total amount of tokens. What will happen is that you probably will send the 10% tokens in advance to show good faith and get zero in return. Many ICO’s have undergone this problem and for some, it’s even the reason to do a token swap.Occasionally you will find some very bad news (or FUD) about your company which can be harmful when in the early phase of the project. Suddenly you will get messages from people stating they can either remove these messages, blogs or videos or know people who have written or filmed these FUD messages, blogs and/or videos. They offer you to remove these against payment of x amount in BTC or ETH. Scammers favourite choice of payment.Your website will suffer a DDOS and the person who is attacking you wants to get paid a certain amount of money. Depending on the size and stage of your token sale, this can vary from a couple of hundred USD to several thousand. Payment possible in most coins and tokens.The most recent DDOS attack on our website Libereum.shopObviously there are many variations of scams and sooner or later you will get the unwanted attention of scammer. There are a few things you can do in order to protect yourself against these scammers.Be cautious whenever someone connects with you. Although it seems to be very friendly at first, people with bad intentions can and will scam you for a lot of money.Always Do Your Own Research (Or DYOR). Find details about the person connecting with you or the projects they are promoting.Stay true to yourself; if your gut feeling tells you something is wrong it usually is.Follow trusted people and ask them for their advice. This might seem hard in the beginning but there are real people out there that can and will honestly help you.Find or create a group of likeminded people and discuss everything with them. Two, always know more than one and the knowledge of ten is as having your own scam hunting squad.Don’t fall for seemingly active groups you find yourself in out of nowhere. You have been lured into a trap and the group is filled with accounts run by the same person. Leave any groups you don’t remember joining.If you find yourself interested in purchasing into an ICO first thing to do is to check if you can reach them by telephone. Every decent company has a phone number listed and it should be available on their website. Then search for the founders. If you cannot find anything about the founders and/or other high-level employees make sure to leave as quickly as possible. A crypto company may work in an industry that promotes anonymity but the company itself, if legitimate should never hide behind those curtains unless they plan to exit anytime soon. Usually with your money.Prefer companies that are seated in countries where they actually practice some law and you know that if they try to exit scam the authorities will take this seriously.You are entering an industry that’s in its early adoption phase. No rules and boundaries have been set and you are amongst the few that dare to pave the way for the masses that will surely follow sometime in the future. Being a pioneer has its perks but also it’s downsides. If you can accept that truth the crypto industry needs you to grow. Don’t be afraid to take part in something this innovative. But also accept the fact that you will be scammed and lose money at one point or another.Stay vigilant always and be prepared to encounter new and sophisticated scams on a daily base. Because for every genuine person in the industry you will encounter ten that have bad intentions. But finding that one person is what matters in the end.Cem KumlarLibereum Founder & CEOThe Capitalhttps://medium.com/media/41dac0615a69a65d0cc0a34fe8b4dde8/hrefHow to Avoid Being Scammed in the Crypto Industry was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.