The crypto world is still something new for most people. Their knowledge of networks, exchanges, wallets, and blockchain is still very limited, which makes it easy for scammers to trick inexperienced investors.
Pic : https://pixabay.com/illustrations/scam-fraud-stamp-thief-crime-7256138/
I have experience of joining some projects that became scams today. Crowdholding, hazza.network, minexcoin are examples of scam projects that I joined and invested in.
The cheaters created tokens on the Ethereum network. They hold 60 % of the total supply. They use a free bounty campaign from bounty hunters on bitcointalk.org. They offered 2-5% of 40 % of the total token supply for the bounty rewards.
When the developer of the project is successful in attracting investors, the bounty hunters will earn rewards in the minted token.
The scam crypto project developers list the token to exchanges. Then, they buy back the token to create panic buying. After that, when the price is in all time high or higher than the ICO. The developers will sell their 60% possessions. They make great profit at the first ATH. They will try the second time. The developers will do some campaign again. This time they will give airdrop. After the campaign, the token become popular.
The popularity will attract the FOMO. Then there will be panic buying. At the second time, the developers sell their 60% possession. At the first ATH, the developers had made great profit and the second time they did.
After that, you may see the website of the crypto is dying. That is the scenario of scam projects. It is like ponzy scheme.