Cryptocurrency scammers borrow time-proven techniques from fraudulent brokers on binary options, contracts for difference, and foreign exchange markets.
The Austrian Financial Market Authority (FMA) recently issued a warning about the cryptocurrency trading services provider CryptoTrader.
However, instead of the correct link to the CryptoTrader website, the FMA has routed visitors to the online bookshop of the Austrian publishing house Darsnek-GmBH.
The warning is likely to refer to the cloud-based trading bot platform of the same name, that offers automated speculative strategies for short-term gains or long-term investments. The link provided in the warning instead directs readers to a page to purchase the book ‘Principles of Banking.’
What’s Wrong With CryptoTrader
According to the statement made by the FMA, CryptoTrader has been providing financial services and targeting Austrian citizens without obtaining permission from the FMA. However, if history is any guide for the future, CryptoTrader seems to be a typical specimen of many scam brokerage firms that have been popping up like mushrooms after rain.
CryptoTrader offers unrealistically high gains for inexperienced traders. You register an account, deposit some money and then sit back and watch your profits grow. Such unrealistic claims are typical for fraudsters that will try to convince you to deposit more cash with them, allow you to trade a bit, then stop answering your emails once you express the desire to get your money back.
Same Old Story With a Twist
The strategy is as old as the hills. It was massively exploited by fraudulent binary options and forex companies dating back to the start of this decade, causing trouble for regulators all over the world.
However, the emergence of cryptocurrencies has made this type of scam even easier to implement, as many coins are based on anonymous or pseudo-anonymous protocols and financial figures. By transferring Bitcoin (BTC) or other major cryptocurrencies to a specific address, you do not know for sure who is on the other end of the alphanumeric public address. It makes it so much harder to spot the crooks and hold them accountable.
Moreover, there is the ever-touted feature of irreversibility—meaning that you do not have a rollback option. Once a transfer is made, it cannot be reversed.
How to Stay Safe
Given the above, the number of scummy and fraudulent online cryptocurrency brokers is likely to grow along with the market. However, you do not have to be a financial guru or a clairvoyant to tell the good guys from the bad.
Keep alert and always do your homework before entrusting someone with your hard-earned money. Check their social media accounts for any customer complaints, make sure that the company is properly registered, always request information from the relevant regulators in case of doubt, and be skeptical of too-good-to-be-true promises.
Remember, the only place you can get free cheese is a mousetrap.
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