Bait and Switch Scam: A Dangerous Fraud in Crypto

1. What is a Bait and Switch Scam?

A Bait and Switch Scam is a common type of fraud in the crypto industry. Scammers advertise highly attractive products, services, or investment opportunities (bait), but once the victim participates, the terms or products are changed, leading to the loss of money or digital assets. In the crypto world, this scam often appears as fake token projects, counterfeit NFTs, or non-existent airdrop events.

2. Signs of a Bait and Switch Scam

2.1 Overly Attractive Advertising

If a project promises excessively high returns, such as "10x in one week" or "staking with 1000% interest," be cautious, as this could be a scam.

2.2 Lack of Transparency

A project that does not disclose the identity of its development team, lacks independent audit certifications, or has a fake website is a potential scam.

2.3 Creating a Sense of Urgency

Scammers often use tactics like "Only 24 hours left" or "Limited quantity" to pressure victims into making hasty decisions.

3. How Bait and Switch Scams Work in Crypto

Step 1: Advertise an Attractive Bait

The scammer starts by promoting highly attractive investment opportunities, such as new tokens or inexpensive NFTs.

Step 2: Lure the Victim In

After creating curiosity, the scammer continues to lure victims by using social media, creating a sense of urgency, and leveraging FOMO (Fear of Missing Out).

Step 3: Switch the Bait

Once the victim has invested, the scammer changes the terms or sends worthless tokens or NFTs, or locks the victim’s assets.

4. Examples of Bait and Switch Scams in Crypto

4.1 Bitconnect (2017)

Bitconnect was one of the largest scams in crypto, promising huge returns from cryptocurrency loans. After attracting billions of dollars from investors, the platform shut down, causing thousands of people to lose their money.

4.2 Rug Pull on PancakeSwap

Another example is the Squid Game Token scam, where the scammer withdrew all liquidity from the pool on PancakeSwap, making the token worthless in a matter of minutes.

5. How to Avoid Falling for a Bait and Switch Scam

To avoid falling for scams, you need to stay cautious of projects promising excessively high returns. Always verify the information, avoid getting caught up in FOMO, and conduct thorough research (DYOR) before investing.