In relatively short existence, cryptocurrencies have managed to rack up trading volumes that would be the envy of ordinary stocks. Consider that bitcoin, which was introduced to the world in 2009, has had trading volumes of between $3 billion to $6 billion per day in the last three months.

But.. Are Crypto’s Trading Volumes A Scam?

These are the recent stories about scam and fraud.

Japanese Cryptocurrency Exchange Zaif Hacked Of Reported 5,966 Bitcoins

As a result of a security breach on September 14, hackers have managed to steal 4.5 billion yen from Japan’s Zaif cryptocurrency exchange, as well as 2.2 billion yen from the assets of the company, with total losses amounting to 6.7 billion yen or around $59.7 million.

SpaceX CEO Elon Musk Turns To Dogecoin Creator To Stop Crypto Scammers

Elon Musk, the CEO of SpaceX and Tesla Elon Musk asked Jackson Palmer, the creator of Dogecoin (DOGE), to help him combat “annoying” cryptocurrency scammers on Twitter this week. Musk, directing his tweet at Palmer, asked for help getting rid of scam spammers, to which Palmer replied by sending Musk a short script in direct messages to try to fix the problem.

If you’re looking to avoid scam from cryptocurrency trading, this article will certainly show you how to do just that.


1. Shady or Insecure Exchanges

The explosive popularity of Bitcoin and other altcoins has seen a huge rise in cryptocurrency exchanges. They all want your attention and, more significantly, the transaction fees that come with handling your purchases.

However, there aren’t many completely trustworthy cryptocurrency exchanges. Popular exchanges have been known to completely disappear overnight, taking all the cryptocurrency with them.

2. Pyramid and Ponzi Schemes

Just recently on the 30th of September, The Central Bank of the Russian Federation has revealed a fraudulent financial system called Cashberry. The project was aimed at inducing people to invest their money in the scam scheme, offering highly lucrative returns on fiat and crypto investments.

“This is one of the most popular financial pyramids revealed in recent years; it has developed activity in many regions all over the country. Moreover, they use an aggressive advertising strategy to involve as many citizens as possible”, explained Valeriy Lyakh, the Director of the Bad Practices Suppression Department at the Central Bank of Russia.

Cashberry’s Operation Scheme

The main principle of the venture’s operating system is multilevel marketing where those who come later pay dividends to their forerunners. They believe themselves to be a P2P investment platform, meaning borrowers can find lenders with a help of this company. To get popularity, Cashberry used aggressive marketing methods, such as pushy advertising in mass and social media, as well as offering highly profitable returns on investments. For instance, they provide 550% returns on crypto and 265% on fiat per year.

The fraudsters accept payments in fiat and digital currency, including the most tradable coins Bitcoin and Ethereum. Trying to fool as many people as they could, the company set a requirement of a 1,000 RUB (12$) minimum deposit that is affordable to factually everyone.

We like to think we’re clever enough to spot a scam when it’s in front of us. But cryptocurrency is creating new scams, using jargon and technology most people have never heard of, let alone truly understand. Even grasping the basics of blockchain technology and smart contracts is difficult for the layman.

3. Some Coins Don’t Actually Exist

In August 2017, the City of London Police shut down a “cryptocurrency business” that was cold-calling people to sell fake digital currency. Victims were cold-called and persuaded to purchase non-existent cryptocurrencies. Nine victims came forward to the UK firm, Action Fraud, with combined losses exceeding £150,000.

The man who allegedly set up the scam used a central London address, in the financial center, to lend the scam authenticity.

Real investors will not cold-call you to offer an opportunity, cryptocurrency or not. If you receive a call asking for your investment in a project, note the name of the caller, the company name and address, and put the phone down. Your next call should be to the SEC to report potential securities fraud.

In conclusion, how could you ever know which is the right one to trust and trade… Leave a comment below on your thoughts to trade safely.


Leave a Reply

Your email address will not be published. Required fields are marked *
You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>