Published: 17 June, 2022

How to Spot and Prevent STO Scams? A Complete Guide

Check out the Guide, To Identify the tricks of STO Scams and how to avoid STO Scams for your Token and Token-Based Platform Published by Osiz Technologies

How to Spot and Prevent STO Scams? A Complete Guide

What is STOs?

STO (Security Token Offerings) are the most recent innovations to the Blockchain revolution. A security token is a unique token that is issued on a permissioned or permissionless blockchain and symbolizes a stake in an external asset or business. Governments and businesses can issue security tokens to serve the same purpose as stocks, bonds, and other equities.

STO are becoming a more effective tool for businesses, serving as a safe and secure means to attract investor interest and raise funds.

How does an STO work?

Security tokens, like ICOs, enable startups to raise funds for crypto projects and new commercial endeavors. Due to the difficulties and limitations of obtaining funding from traditional venture capitalists, other methods of obtaining capital, such as STOs, quickly became popular. STOs are legal and regulated, making them a safe way for businesses to raise capital.

Another purpose of security tokens is crypto-fractionalization, which involves tokenizing or securitizing existing assets in the real world. Tokenization makes it easier to trade securities and reduces the cost of administration. When securitization is implemented in equity markets, paperwork will be considerably reduced or eliminated.

Types of Crypto scams

Crypto scams come in a variety of types. Here are some of the types of crypto scams, 

Fake websites

To deceive unwary customers, scammers sometimes develop fake cryptocurrency trading sites or fraudulent versions of official crypto wallets. These fake websites frequently have domain names that are similar to yet somewhat different from the sites they are attempting to imitate. They resemble legitimate websites in appearance, making it difficult to tell the difference.

Giveaway scams

Scammers' offer to equal or multiply the cryptocurrency transferred to them is known as a giveaway scam. Clever messaging from what looks to be a legitimate social media account can create a sense of urgency and establish trust.

Blackmail and extortion scams

Scammers also employ blackmail as a tactic. They send emails claiming to have a record of the user's visits to adult websites and threatening to reveal the information unless the victim shares private keys or sends cryptocurrency to the fraudster.

Cloud mining scams

Cloud mining is a term used to describe organizations that rent out mining hardware in exchange for a fixed charge and a percentage of the revenue generated. In theory, this allows people to mine from afar without having to purchase expensive equipment mining hardware.

Phishing scam

Phishing attempts using cryptocurrencies commonly target online wallet information. Crypto wallet private keys, which are required to access funds within the wallet, are the target of scammers. They send an email to persuade users to visit a specially created website where they are requested to submit personal information such as passwords. Once the hackers have this information, the cryptocurrency in those wallets is stolen.

Pump-and-dump schemes

This involves fraudsters hyping a particular coin or token via email or social media platforms like Twitter, Facebook, or Telegram. Traders hurry to buy the coins because they don't want to miss out, driving up the price.

Fake celebrity endorsements

To attract the attention of potential victims, crypto fraudsters may impersonate or claim endorsements from celebrities, businesses, or influencers. These fraud games can be sophisticated, incorporating flashy websites and booklets that purport to feature celebrity endorsements from well-known figures.

How can you protect yourself from becoming a victim of cryptocurrency fraud?

Many cryptocurrency scams are sophisticated and convincing. Here are some actions you can do to safeguard yourself,

Protect your wallet

To invest in cryptocurrencies, you'll need a wallet containing private keys. It's nearly always a scam if a company wants you to share your keys in exchange for an investment opportunity. Keep the keys to your wallet hidden.

Keep a constant check on your wallet app

To ensure the integrity of crypto wallet software, send a small amount the first time you transfer money. If you notice strange behavior while updating your wallet app, stop the update and delete the app.

Be wary of social media advertisements

Social media is commonly used by cryptocurrency scammers to advertise their misleading schemes. To generate a sense of credibility, they may use unauthorized photographs of celebrities or high-profile entrepreneurs, or they may promise rewards or free money.  Maintain a healthy skepticism and do your homework when you see crypto opportunities advertised on social media.  

Ignore cold calls

If someone contacts you out of the blue to sell you a cryptocurrency investment opportunity, it's nearly always a scam. Ever give up your personal information or transfer money to someone who approaches you like this.

Apps should only be downloaded from official platforms: Although fake apps can appear in the Google Play Store or Apple App Store, downloading apps from these stores is safer.


Finally, like with any investment opportunity, never invest money you can't lose. Even if you aren't being scammed, cryptocurrency is a volatile and speculative asset, so you must be aware of the hazards.

Do contact us right away if you have any additional queries.

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