If you’ve ever searched for “crypto” on YouTube, you’ve probably seen many ads promising easy money with digital currency. Surprisingly, many of these offers are not trustworthy.
There’s a growing scam called “front running” that claims you can make up to $1,400 a day passively with crypto. But often, it’s just a way to get scammed.
A new study by a blockchain security company called Certik shows that most videos titled “front running bot” on YouTube are scams. In fact, 84% of these videos are fake. To understand why this scam is so tricky, it’s important to know what front running actually means.
What is crypto front running?
Front running in crypto can be a bit complex, but let’s break it down simply. Imagine someone wants to buy crypto and another person, the “front runner,” sees this transaction coming.
The front runner then pays more in “gas fees” (which are like a speed fee for processing transactions faster on the blockchain) to jump ahead in line.
Once they’re ahead, they buy the crypto first, which raises the price because there’s now less available. Then, they quickly sell it at this higher price.
By the time the original person’s slower transaction goes through, the price has gone up, and they get less crypto than they expected. The front runner makes a profit from this quick buy-and-sell.
This is similar to a scheme in the stock market called front running, where someone uses inside knowledge about upcoming trades to make a profit. However, in crypto, this scheme uses the technology of the currency itself. It involves automated bots that can move incredibly fast to jump in after a transaction is shown on the blockchain but before it’s completed.
Here’s a simple explanation from the Certik report on how crypto front running scams work:
Where does the scam part come in? Dishonest front runners claim to have “insider knowledge” about which crypto assets will increase in value and when. They offer to teach others how to do their own front running by installing some code that supposedly does all the work, which they say will generate passive income.
(It’s important to note that both in crypto and the traditional stock market, this kind of insider trading is illegal, according to the Securities and Exchange Commission.) That’s when the front running scam really starts.
How does a crypto front running scam work?
Victims are drawn in by the promise of easy money, shown in convincing YouTube videos by “crypto gurus.” These videos teach them how to use special code on their computers to make money.
However, instead of helping you make money, this code is actually harmful software. When you put this code on your computer, it lets the scammer watch what you do. The scammer will then ask you to move your money, claiming it will be used for trading on your behalf. But really, you’re just handing over your crypto to the scammers.
How to protect yourself from crypto scams
Unless you can read code, never run any code unless you completely trust the person giving it to you—and trust shouldn’t just come from watching their YouTube videos.
Also, if something sounds too good to be true, like making more than $1,000 a day in passive income just by copying and pasting a few lines of code, it probably is.
Be suspicious of any promise that says you’ll get high returns with little effort. This is usually a warning sign that something isn’t right.