Cryptocurrency exchanges are services where various operations with digital currencies are offered: buying, selling, exchanging, investing at interest. But it is important to remember that not all cryptocurrency exchanges are honest and reliable. Some platforms are created to deceive investors.
What do you need to know about fake cryptocurrency exchanges? How to avoid scammers and protect your funds from criminals?
How to recognize a fake exchange
You should be wary of cryptocurrency platforms that promise unrealistically high earnings. Such claims are made by scammers operating on the principle of a Ponzi scheme. The absence of legal documents is another warning sign. If the service lacks a license and the platform administration refuses to show it, you should immediately refuse to cooperate.
Legitimate companies operate publicly and do not hide their owners. Fake cryptocurrency exchanges usually do not publicize their team because, in reality, the firm consists of just one or two crooks. The absence of contact information is also a sign by which you can immediately classify the service as fraudulent.
You can recognize a scam by the appearance of the website. Spelling and grammatical errors in the content, incorrectly functioning sections, and cheap design immediately betray the criminals.
Main types of cryptocurrency exchange fraud
The most popular scam is phishing. Criminals create mailings on social networks and various themed forums using the brands of well-known reputable cryptocurrency exchanges. By following the link provided by the fraudsters, traders end up on a fake website where they log in. After that, the scammers steal personal information from investors and take cryptocurrency from their wallets.
Fake support in a Telegram channel. Many cryptocurrency exchanges create this type of support for their clients. It is a very convenient and quick way to resolve emerging issues. The user contacts the Telegram channel, explaining their problem: unable to log into the account, cannot withdraw money, or high commission. Immediately a scammer writes to the person, asking for login details to resolve the issue. But while the investor is waiting, the crooks will already have withdrawn all coins from their wallet.
False exchange platforms – sites where extortion and threats may occur. A trader registers on a fake cryptocurrency exchange, deposits money, and then access to the account is blocked. To unlock it, criminals demand payment. If the person refuses, the scammers begin to exert psychological pressure on the user – extorting and threatening.
Signs of a scam exchange
Fraudsters on cryptocurrency exchanges are constantly improving their skills and coming up with various ways to deceive.
It is impossible to say unequivocally that a particular company is fake. But there are several main signs by which fraudulent cryptocurrency exchanges can be identified:
- absence of Terms of Cooperation, Anti-Money Laundering Policy, and other legal documents;
- offers to buy unknown coins at an attractive price;
- bonus rewards for registering on a cryptocurrency exchange. As a rule, scammers promise to pay it only after the account is topped up. As a result, investors receive neither the bonus nor their money;
- incorrect operation of the service and frequent failures. This means that the creators of the exchange are only focused on receiving money from traders.
The platform usually hangs during the withdrawal of funds.
Another sign of a scam exchange is the developers' promise of profitable buying/selling/exchanging of digital currencies and high income when investing crypto at interest. At the same time, the details of trading operations on the service remain secret.
How to protect yourself from fake cryptocurrency exchanges
To avoid falling prey to scammers, it is recommended to study the cryptocurrency exchange carefully, where cryptocurrency deals are planned.
Do not trust empty tales of big earnings and profitable exchanges. Especially if the company lacks a license to conduct activities. It is essential to verify contact information. Provided contact details are not always truthful.
Reviews – another way to avoid cooperation with cryptocurrency scammers in time. The main thing is that all feedback about the exchange should be written by real people, not fake stand-ins.
False exchange platforms are gaining momentum. To avoid falling into their scams, do not click on suspicious links or fall for enticing advertisements. It is recommended to trust only official projects that do not promise huge profits in a few hours.