How to spot Bitcoin scams

In the Bitcoin and cryptocurrency space, scams are prevalent. Not only is the industry largely unregulated, but it is fairly new so there is less known about it. So, here’s how you can spot a scam as Mine Digital explains.

How to spot a cryptocurrency scam

Considering recent events, all Australian’s should be vigilant when sharing their personal information with anyone else. Many are desensitized to entering information into websites and sending via email information that traditionally would have only been given to our most trusted parties like law enforcement, government agencies, legal representation, accountants, etc. Sophisticated international criminal organisations are constantly planning, executing, and refining scams and schemes to try and obtain victim’s identification or steal their assets.

To help protect yourself against scams, keep in mind some crucial points, including:

Know who/where you are sending funds

Whilst this sounds obvious, one of the easiest tricks that perpetrators do is to “switch” payment details at the last minute. In a recent scheme, investors thought they were purchasing an investment product from a well-known company who held accounts with a well-known bank. However, victims were told to send funds to a different company and a different bank. You should always check payment instructions and for larger sums, consider verifying the payment details by phone, going in through an official phone number of the company shown on their main website.

Query why someone is asking for a document

Do not send any personal information unless you are satisfied you are dealing with the right party and there is a real reason why they are asking you for that information, for example, there are only rare situations where a tax file number needs to be provided to a party.

Do they hold appropriate licenses?

Just as you would not go to a dentist, lawyer, accountant who does not have the requisite licenses/qualifications, you should not trust your assets to someone who isn’t qualified. If you are dealing with someone in Australia and they are giving you advice or selling you a financial product, they must hold an Australian Financial Services License (AFSL). For cryptocurrency, there are two things you can look out for. Is the exchange registered with AUSTRAC and are they a member of Blockchain Australia?

Related article: How To Tell If Your Cryptocurrency Exchange Is Secure

Is the company domiciled (that is incorporated) in Australia?

If this is not the case, you will have severely limited recourse, even if the company is legitimate. Australian regulators and the Courts have limited jurisdiction in relation to overseas companies. Some overseas jurisdictions such as the UK, US, Canada, New Zealand and parts of Europe like France and Germany have robust legal systems in place that can offer assistance but it is still an expensive process. Most scams are associated with countries with weaker legal frameworks including Belize, St Vincent and the Grenadines, Bermuda, Labuan and other exotic locations.

Consult trusted parties

For some people this might mean their financial advisor, accountant, solicitor, etc – whilst others it might be a parent, sibling, child, etc. This simple act can be extremely effective. Two things happen when we explain something to another party; 1) it helps to clarify our own thinking on the topic; AND 2) if you struggle to explain the proposition, then it likely means that it is not appropriate for you. If someone you trust thinks your idea is dangerous or risky, stop for a moment and take that on board, as they are probably right.

If it sounds too good to be true, it probably is

The organisers of many scams have methods to convince victims that their offer is “special”. Some are as simple as providing doctored trading statements, and some are as advanced as using historical market movements and then replaying them as contemporaneous and generating “outsized” profits via their ability to time investments.

Related articles: How to buy Bitcoin in Australia

Do you understand the product, asset and strategy?

If not, then you need to consider if it is appropriate for you. Don’t buy something you don’t understand and beware of ‘educational programs’ which can be funnels to scam trading.

Why are you making this decision?

Many times, victims are taken advantage of in moments of acute personal stress [i.e., separation, loss of a job, etc]. If you are experiencing personal hardship, seek support from family, friends or support services. Remember you are not obligated to have to open that account or send that money.

Can you afford to lose your entire investment?

This might sound extreme, but in most cases even if the scheme is not outright fraudulent, they are likely to be high risk. You should not invest/trade more than you can reasonably afford to lose. A common trap people fall into when evaluating potential investments is to assume the most beneficial outcome is also the most likely.

How, why & where were you contacted to the existence of this offer?

Did you click an advertisement on Facebook offering to deliver fantastical returns? Firstly, you are not alone. We all have clicked such offers. But take a moment to think, if the person, company or platform were able to generate such performance, why are they randomly advertising on Facebook?

Related articles: How to buy cryptocurrency in Australia

If they are representing an organisation, do they have an appropriate email address?

Does the address to the website look real [e.g. say you think you are dealing with a Bank called EDF, then you’d expect the address to be something like EDF.com. If the website has a complicated series of words it is likely to be a scam.

Celebrity/Influencer endorsements

In near every case the endorsements are baseless and fabricated without the knowledge of the celebrity. If a celebrity is endorsing something, it will be on that celebrity’s official website or social media channels (and beware of fake accounts!).

Do not EVER grant remote control of your computer to another party.

This is a crucial part of the process of the scammer. You can fall for all the tricks in the world but the moment you grant access to your computer and/or internet banking is the moment your money is at risk.

Monitor your email

Email accounts are most likely to be targeted by attackers as their first step into your periphery. Receiving unsolicited emails is an immediate red flag to watch for.

Listen to your inner voice

Victims frequently lament that they felt unsure but are coerced into acquiescence via aggressive marketing tactics. Remember it is always your decision and you are entitled to say no or request more time to consider the decision. If you do not feel 100% comfortable about the commitment, then do not proceed. Also remember if the person is actually representing the type of organization they claim to, their staff are highly trained and will not become angry/insistent/frustrated/abusive.

The following is a non-exhaustive list of companies that have been linked to cryptocurrency and investing scam activity that we’ve recently heard of.

Known scams:

• Grandefex
• WDC Markets
• CTX Prime
• ICMG
• GT Stox
• Any1Pro
• Universal Markets
• Coin-bits
• Oasis Trading
• Golden Sky Capital
• Ads Supply
• Click2Sell
• TradeInvicta
• 500.trade
• Libra markets
• FairBit
• StarCapital
• Bitcoin Revolution
• ProuFX
• USI Tech
• Olympia Markets
• ASTAK IT Consulting
• Go365
• AussieTrust
• StocksCM
• Immediate Edge
• World Markets
• MTI Club
• Finalmente
• Walton Chase
• GoldmanBlock
• CanaMedic
• Trade99
• GTLOT
• 28Crypto
• AnalystQ
• R24
• Jacque Yves Nuar CO (JYNCFX)
• Mirollex
• Profits Trade
• Merkell Group
• Markets Pilot
• Arbistar
• getxrp.fund
• Winn Group
• Segregated Solutions

If you are reading this list looking for the company you’re working with and haven’t found it, please get in touch and let us know regardless of whether you have suspicions or not and we can help you make an informed decision.

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