Avoid cryptocurrency scams, squid game tokens and other Defi risks – Sponsored Bitcoin News
The following article was written by Binance CEO and co-founder CZ.
DYOR, or do your own research, is a concept that I think every investor should know. It is as close to the golden rule as anything in the crypto world, but it applies more broadly to anything you plan to invest in, from Bitcoin and bonds to stablecoins and stocks.
Earlier this week, an anonymous developer behind a DeFi project called Squid Game Token suddenly carried out a “carpet pull”, a common scam in which the team behind the crypto project took off with user funds. As these scams become more and more common as the DeFi space grows, I would like to take this opportunity to remind users that DeFi is not without risks. We hate to see anyone lose money due to scams and other cyber crimes.
Squid Game Token: What happened and why?
Last week, a cryptocurrency called SQUID began trading on the decentralized exchange PancakeSwap. It quickly gained traction among users, many of whom believed that there was a connection between the project and Netflix’s recent popular series “Squid Game”.
The project is not without red flags, and careful users will find out soon. Users who bought the token reported that they could not sell it, and any official association with the Netflix series was quickly denied.
Despite the warning signs, speculators continue to buy tokens, pushing prices up exponentially before the project founders run out of liquidity pools within minutes, and taking away investors’ funds in the process.
Why can’t these projects be banned or delisted?
Someone may ask, why can’t Binance do anything with DeFi projects like SQUID? I think it is important to explain here that blockchains like Binance Smart Chain (BSC) and Ethereum are open source. We do not have any control or influence over projects built on the Internet. Since BSC is completely driven by the community, decisions related to governance need to be coordinated by the community. The same is true for any other open source blockchain, such as Ethereum.
However, our security team initiated an investigation to show our support for the broader crypto community. I can confirm that we are taking the following actions:
- Committed to identifying and blacklisting addresses related to developers
- Deploy blockchain analysis to identify bad actors
- Provide our findings to law enforcement agencies in appropriate jurisdictions
I want to make it clear that in this case, we can hardly recover funds or intervene. Similarly, Binance is not associated with BSC-based projects and has no oversight or control rights.
Regarding efforts to avoid DeFi exit scams
The fact is that SQUID will not be the first or last DeFi scam. In the past year, more investors have entered the market for the first time than at any time in my memory. It’s not just DeFi or encryption. On Twitter, stock quotes often become a hot topic.
We are entering a peak of speculation-people are looking for the next plan to get rich quickly or a 100-fold opportunity. The fact is, those 100X don’t appear very often. When they do, they usually bring a lot of risk, and sometimes the risk is so great that the line between investment and gambling becomes blurred. At Binance, we invested a lot of time and resources to create free educational materials to help our users better understand and navigate the crypto world. This is why you should always DYOR.For more reading about the risks of DeFi, our Academy team has compiled a very detailed guide How to spot common DeFi scams.
Why I suggest beginners start with centralized finance or CeFi
If you are not familiar with encryption, I suggest you choose a centralized exchange like Binance first. CeFi platforms still have risks, but they usually have more user protection mechanisms. Due to the centralized nature of these platforms, if there is a problem, there are more opportunities for remediation. Larger, reputable platforms like Binance are designed to be easy to access and use. They are an important gateway to the world of encryption.
For more advanced users, DeFi has some very compelling benefits. As I said before, I personally think that decentralization is the future of this industry. With DeFi, anyone can access encrypted products and services without relying on intermediaries.
Why wait for the centralized exchange to list the tokens you care about, and you can now go to the decentralized exchange to buy it without paying any transaction fees? DeFi eliminates middlemen and allows you to conduct direct transactions with counterparties. However, DeFi can be complicated. You must manage your own keys-lose them and your funds will disappear forever. There may not be a review process or guardrail to prevent you from interacting with suspicious items. The smart contract that facilitates your transaction may have loopholes that you don’t know about.
For me, the benefits of DeFi far outweigh the disadvantages, but you need to arm yourself with encryption knowledge first. If you have information about an ongoing scam, please feel free to leave a message to our team: Investigate @binance.com
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