Liquidity mining and yield-farming scams promise high returns for providing liquidity or “mining” rewards, then disappear with deposited funds.
How These Scams Typically Operate
Scammers create professional-looking platforms or dashboards that display growing balances. Victims deposit crypto or provide liquidity. Early small withdrawals may succeed to build confidence. Later, larger withdrawals are blocked or require additional “fees,” “taxes,” or “unlock” payments. Eventually the site and operators vanish. Some variants use malicious smart contracts that accept deposits but never allow legitimate withdrawal.
Red Flags
- Guaranteed or extremely high APYs with little risk disclosure
- Pressure to deposit quickly or refer others
- Anonymous teams and unverified contracts
- Requests for additional payments to release funds
- Poor or non-existent documentation and audits
How to Protect Yourself
Only use well-known, audited protocols with transparent tokenomics. Never treat displayed dashboard balances as real until funds can be freely withdrawn to your own wallet. Avoid platforms that require continuous additional payments.
Frequently asked questions
Legitimate protocols have verifiable on-chain activity, public audits, and no requirement for extra payments to withdraw. Scam platforms rely on dashboard numbers that cannot be independently verified.
Sources and further reading
- FTC and IC3 warnings on investment scams · Federal Trade Commission (FTC)