I Got Scammed! The crypto world can be a dog-eat-dog world. Let this be a lesson to always err on the side of caution when scouting out high-risk investment opportunities - and only invest what you can afford to lose!
It brings me great shame to admit this, but I regrettably fell victim to a rug-pull.
Now, for those of you who don’t know what a rug-pull is, it’s another way of saying you were scammed 100% out of your investment. It’s when an owner, founder, company, or any form of crypto developer promotes a new project to gain followers/customers— and then, after gaining hundreds of new investors (customers) — drops (or cancels) their project and disappears into thin air with hundreds of thousands or even millions of dollars of stolen investments.
I was one of those investors who had their investments abra-kadabra’d into the abyss.
The cruel, yet humorous part about this whole series of events — is that I (I kid you not), had a post drafted up (which I had planned to complete a final read-through before publishing) talking about a personal account of investing into the specific platform that unbeknownst to me at the time, would in just 24 hours, perform a rug-pull and scam me out of my investment.
Even though this may have proven to be a monumental screw-up, rather than deleting the drafted post entirely — I thought it could be fun to instead go back over my post and add comments now that I have been graced with the wisdom of hindsight. So to rub more salt into the wound, I am going to call out quotes throughout this article that I had written in the draft prior to learning of the rug-pool, so you can see just how wrong (or in some cases, right) I was about the project that scammed me.
The Original Post (Summarised)
Here’s How You Can Earn 2.21% ROI (Per Day) On Your Investment With A Single Click Of A Button
That’s what the title was going to be!
…..But now, after knowing that I got scammed, Hmm… I think something along these lines would have been a hell of a lot more fitting:
How To Lose 100% Of Your Investment In A Single Day With A Single Click Of A Button
Aside from the fact that the project turned out to be an entire scam, what was it that attracted me to invest money into it in the first place? And the answer to that question is a simple one — technology. Specifically, applying automated technology to leverage and maximise returns using a strategy known as cryptocurrency arbitrage trading.
This is where it gets interesting, so putting the scam aside for a minute— lets have a glance into the concept of arbitrage trading.
What Is Arbitrage Trading
“Arbitrage is Profiting From Information Asymmetry”
Arbitrage trading is a method that can guarantee a profit by taking advantage of information asymmetry (price disparities). At any given moment, the price of cryptocurrencies listed on various different exchanges such as Binance, Kucoin, Coinbase etc. will differ slightly. This is because each exchange operates independently from the other, and thus the price of the listed cryptocurrencies depends on the buying and selling activity (supply & demand) of that particular exchange. Regardless of how little the price fluctuations between exchanges may be, the fact of the matter is that a trader can theoretically guarantee a profit by buying a cryptocurrency at a particular price on one exchange and selling the same cryptocurrency for a higher price on another.
Arbitrage trading is not unique to cryptocurrencies either. High-frequency trading originating from Wall Street is a common occurrence. Essentially, this method uses algorithms that can complete buy/sell transactions in minuscule amounts of time, on the order of milliseconds. By arbitrage trading just tiny differences in these share prices, the algorithms make substantial amounts of money due to the sheer volume of trades made.
Although the idea of arbitrage trading may sound like a no brainer, actually achieving it, in reality, is extremely challenging. Since the price fluctuations occur so spontaneously, it’s almost impossible to manually complete an arbitrage trade quickly enough such that the information asymmetry works in your favour.
It’s almost as though there needs to be a cryptocurrency arbitrage trading platform that automates your trades for you! (oh, wait….)
On that note, I think it’s time for the moment you’ve all been waiting for…
— the revelation of the project that scammed me.
Enter Swapnex (The rug-puller)
Swapnex — A word that will forever make me curl over in defeat at its very mention…
Okay, sure — I may be exaggerating. After all, I had ~$300 USD invested in the platform at the time of its collapse, an amount at which, luckily, I could afford to lose.
Unfortunately, though, not everyone was so lucky. There are victims of the Swapnex scam who have suffered losses of tens of thousands of dollars worth of investments. And with Swapnex completely shutting down their website and all communication channels (including Telegram, Twitter, Facebook & Medium), we’re left with little reassurance on whether any of the stolen funds will be tracked down, let alone returned.
Why I Invested Money Into Swapnex
As I briefly touched on earlier, what drew me to invest money into Swapnex was the technology they were using to leverage arbitrage trading.
Rather than manually buying a cryptocurrency from one exchange and then trying to sell it for a higher price on another exchange, Swapnex, with its arbitrage trading software — offered customers a fully automated, essentially ‘set and forget’ solution.
After funding your Swapnex account, all that was required was to use their software to execute several automated arbitrage trades each day (the longer you locked your money up the more trades per day you would be allowed).
And what’s surprising is — that, for months Swapnex delivered on exactly just that. Hundreds, if not thousands of customers were earning Return-on-investments of 3% or greater each day. Even for me, on the first day that I invested $58 into the platform, I saw ROI’s of greater than 2% which ultimately swayed me to increase my investment to ~$300.
Legit Or Scam?
An excerpt from my original post..
To be honest, I dont have an answer. So far, my funds have consistently achieved a 2–3% ROI per day. From what I’ve expereienced, there are several Swapnex social media forums for customers to discuss project and investment related topics, and the company is continously bringing out new features to the trading website, as well as adding layers of security (Two-factor authentication for example).
With all that said, who’s not to say the entire project could be nothing but a rug pull —building up their customer base, waiting patiently for the right time to strike us all clean out of our investments. I certaintly hope that’s not the case, but I can’t rule it out as impossible!
I have to give it to them — they were convincing
Ultimately, Swapnex has definitely proven they are a mastermind of the scamming world. With their ability to build a strong following and convince people such as myself to invest into their technology, they really did set up a cunning long term attack. What surprises me though, was the well-maintained and frequent updates being made to the website. That paired with the community that existed in support of the platform, I wonder had they actually focused all the effort they put into scamming people instead into their platform, maybe they could have delivered on everything they claimed they were!
Salvaging A Learning Experience Out Of A Bad Situation
Yes, being scammed sucked, bad! But fortunately for me, I only invested what I could afford to part ways with, in the event something did go wrong (and low and behold, something did go horribly wrong!).
I got scammed, you got a learning experience – at least one of us benefits, right?
Only invest what you can afford to lose
Trust me, I know — it can be tempting to set aside your common sense, forfeit any form of due diligence, and gamble into a project without conducting thorough research — all in order to make a quick buck. But, let my mistake be a reminder — always do your own research (DYOR) and remember, when it comes to crypto, if it sounds too good to be true, then it’s probably highly likely that it is too good to be true…
This whole rug-pull incident has got me thinking that I could be doing more to help educate the wider community about some of the common traps and scams that are prevalent in the cryptocurrency environment at present. So be sure to follow me and subscribe to my channel so you receive notifications for my future stories!
In the mean time, if you are a crypto enthusiast, then these posts are absolutely essential for you to know about to protect your crypto assets!
Have a splendid day!