By Evan Spicer
Director of Cryptocurrency Investigations
During the last year, even the biggest crypto fans learned to be careful of celebrity endorsements. Some of the biggest names in Hollywood and sports unwittingly ended up promoting fake coins and corrupt exchanges involved in bitcoin scams.
One celebrity who may be worth listening to about the blockchain is Mark Cuban, who is warning the public about a “new” type of crypto scam.
Mark Cuban – the One Celebrity Worth Listening to About Crypto Investing
This type of “new” crypto scam isn’t really new. However, the term “wash crypto scam” should enter the collective lexicon. Entrepreneur, high-profile investor and Dallas Mavericks owner Mark Cuban has consistently provided prudent advice about crypto investing. Far from hyping up new coins and exchanges, Cuban is aware of the risks of these fly-by-night crypto scams.
Although many respected investors regarded cryptocurrency as an inherent scam at first, even mainstream brokers and financial services have realized that digital currency is here to stay. As many central banks around the world are issuing national cryptocurrencies, the blockchain can no longer merely be dismissed as a fad.
However, Mark Cuban urges caution and considers cryptocurrencies a speculative trade which should compose only a modest position in a portfolio, given the high volatility. He also warns crypto traders against frauds. His newest warning is against wash scams.
What Are Wash Crypto Scams?
The main complaint many traditional investors have had about cryptocurrencies is they don’t seem to be worth anything. For most cryptocurrencies, there’s no way to lever value to something concrete like a currency or a commodity. This isn’t true of stablecoins, which are linked to assets or central bank-issued digital currencies.
However, some crypto scams have emerged from coins that seemed to have underlying value. The huge slide in cryptocurrencies in the spring of 2022 began as sister currencies Luna and UST, collectively known as TerraUSD, lost their connection to the dollar.
Was USDTerra/LUNA a Wash Crypto Scam?
Crypto users thought that UST was levered to the dollar and was a real stablecoin. In reality, it lost its peg to the dollar and it turned out it wasn’t supported by dollar reserves but only by its sister currency, LUNA. As a result, TerraUSD took a dive and so did investors and companies that relied on this cryptocurrency.
TerraUSD was one kind of wash crypto scam. It’s only one of thousands. In fact, most ICOs, or initial coin offerings, are fake and have no underlying value. The term “wash crypto scams” describes measures people take to get people to invest in their phony coin. They’ll take desperate measures to convince people their assets will increase in value.
Mark Cuban Warns Wash Crypto Scams Could Cause “an Implosion” on Crypto Exchanges
Mark Cuban warned readers of TheStreet.com that wash trades may be the “next possible implosion” on crypto exchanges. “There are supposedly tens of millions of dollars in trades and liquidity for tokens that have very little utilization,” he continued. “I don’t see how they can be liquid.”
In other words, one of the reasons people want to invest in cryptocurrencies is because, unlike real estate or art, it’s liquid, meaning you should be able to get a hold of your money easily. It should be simple to cash out cryptocurrency in fiat currency, like dollars, euros or British pounds.
However, people often find they can’t cash out their holdings in cryptocurrency. This is one sign of a crypto scam. That’s often because there is no underlying value. It’s all based on hype, and in the case of crypto scams, fake information.
How Wash Crypto Scams Work
The operators of wash crypto scams will make it seem as if people are buying fake coins like hotcakes. They will base their encouragement that people should buy a particular coin on the hype surrounding it. These crypto fraudsters are masters at creating this hype as well as falsifying data about how much of the coin is being purchased and sold.
Wash scams can even take place with bitcoin. It’s disturbing that, when looking on several websites, there can be widely divergent accounts of bitcoin price. Assets and currency should have indisputable value. That is the only way these assets can be traded. However, in the current environment of opacity and disagreement about basic value of currencies, wash scams will thrive.
Is Crypto Recovery from Wash Scams Possible?
One of the troubling aspects of wash bitcoin scams is that it tries to fool people into thinking coins have value when they are probably worthless. Therefore, it’s no mystery that these bitcoin scams don’t want to allow people to withdraw their funds. After all, they may have invested dollars, but the only thing they can get for it is worthless tokens.
However, with the right assistance, fund recovery from wash crypto scams is possible. It’s important to track down the people who took your funds. The blockchain can be a maze, but MyChargeBack experts can help you unmask crypto scams and help you take the first steps toward crypto recovery.
If You’ve Lost Money in a Wash Crypto Scam, Contact MyChargeBack
It’s important not to give up if you are a victim of online fraud, but to seek recourse immediately. MyChargeBack has developed working relationships with law enforcement agencies worldwide, has extensive knowledge and experience with crypto tracking, and can improve your prospects of getting your funds back.