Crypto pyramid

LATOKEN Checklist: How to Distinguish a Working Crypto Project From a Crypto Pyramid

Crypto pyramid… What is it? Crypto scammers are increasingly coming up with new schemes to steal users’ funds. We want to name the key factors by which such crypto scam schemes can be identified. Here’s our LATOKEN checklist.

How to distinguish a crypto pyramid scheme

  • Crypto pyramids have no free trading market. Study on which exchanges the token that interests you is traded on. There should be many exchanges, and among them, there should be well-known large platforms. If the project’s entire infrastructure is concentrated on only one website, it is a very bad sign. For example, on the LATOKEN exchange, you can find many tokens, and you might be sure that you are dealing with a real crypto project and not a cryptocurrency scam. LATOKEN is an international crypto-exchange and IEO platform with over 1.3 million users worldwide. That’s why you can just forget about the LATOKEN scam!
  • Crypto pyramids always have liquidity problems. Even if the token is listed on several exchanges, you should definitely check the history of transactions for the pair with the token you are interested in. There should be many deals, and the order book should have offers for both the sale and purchase of the asset. If the token you bought is traded on dozens of exchanges with large volumes, as well as many AMM (Automated Market Making) services and swaps, it is a good sign. Even if any source from the list is closed for some reason, you will still have access to liquidity on all other sources.
  • A real crypto project will have its own desktop wallets and browser extensions and support from developers of many third-party wallets and mobile applications. Crypto pyramids also do not have their own software.
  • A pyramid has no active community. All messages on the forums and telegram channels of the project look like advertising. There is a lack of diversity of opinions and dialogue between participants. Messages with specific questions or doubts are deleted or receive generic responses.
  • The central condition for participation in the crypto pyramid scheme is referrals’ and friends’ drive. Cryptocurrency projects or exchanges may also offer various bonuses for registering using your referral links, but these bonuses are quite modest, and their use is optional.
  • The pyramid offers huge annualized profit margins. Real crypto projects never offer fixed fabulous return percentages. The success of your investment depends on the market situation for the asset you buy. An exception is tokens for providing liquidity (LP tokens) on decentralized financial platforms (DeFi).
  • Pyramid tokens have no functionality. Real project tokens can have many functions — from providing holders with the opportunity to vote on the development of a project to being used as an internal currency in a computer game or video hosting service.
  • It is also worth paying attention to where the information about the potential investment came from. This is a subjective criterion; however, this item will help you quickly mark information for yourself as potentially dangerous. On which website did you read the information about the project? If this resource has a long history and a good reputation, the likelihood of getting into the crypto pyramid is less. Every well-known source tries to take care of its reputation and mentioning such a crypto scam can seriously damage the image.
  • The above also applies to people you interact with. Does your friend recommend you to invest somewhere? It’s time to ask questions: why do they need this? What is the history of their own investments in the past? A real expert with extensive experience in trading will definitely mention the risks of any investment and recommend using only a small amount of your total portfolio for a new project. On the contrary, crypto scammers will be overly optimistic, and they will rush you and recommend you invest as much as possible. This goes against the generally accepted rules for trading and managing funds.

Using this checklist will help you reduce the risks of being involved in crypto pyramids or another cryptocurrency scam. However, remember that the creators of the pyramids never stand still and come up with new ways to deceive users. The final decision on purchasing a particular token is always yours; make a decision only when you have studied everything yourself, using all the methods available to you.

If you want to learn more about crypto projects, different tokens through LATOKEN Review, and tips on avoiding becoming a victim of crypto pyramids or another crypto scam, follow us on Medium, LATOKEN Blog, or LATOKEN VCTV channels. 


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LATOKEN crypto exchange does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Like other assets, cryptocurrency is subject to market risk. Please do your own research and trade with caution.