Fake Cryptocurrency Exchanges

The growing popularity and decentralized nature of cryptocurrencies have also made it easier for many irritants to flourish through their malpractices. Earlier we discussed some common scams in the crypto-world. But we still need to explore what leads a person to fall for such unethical activities, how to identify them and what can we do to minimize them. In this blog, we are trying to find the answers to such questions.

What are Fake Cryptocurrency Exchanges?

Fake crypto-Exchanges are unregulated tokens or coins that appear legitimate and very convincingly persuade the traders to invest in them.

It’s only later after the scam happened, that the trader realizes that it was fake. There are many such fake exchanges running scams on the internet.

Indicators of Fake Exchanges

• Fake ICOs (Initial Coin Offerings)– Many of the new exchange platforms provide customer bonuses by an initial offering of coins. The scammers generally find this as an opportunity to generate fake currencies and acquire personal details by asking for KYC and all. So, even before investing in such exchanges do check the legitimacy of cryptocurrencies.
• Imposters — Some fake exchanges appear as an authentic branches of well-established cryptocurrency. For example — bitKRX pretended to be backed by a Korean trading platform.
• Fake Tokens — Sometimes the scammers issue a new cryptocurrency to derive money from the DeFi platforms, like a man in New York stole over $6 million USD posing as the new digital currency backed by gold.
• Fake dApps — Another way to approach the victims is through fake dApps. Through this fake dApp, people can invade the private data of the victim like account number, password, etc. which easily allows them to run phishing scams.
• Guaranteed Returns — Most people fall for a scam if they are ensured a fancy return. Bernie Madoff led one of the biggest ponzi-scam using this trick.
• Cold-Calling — This is another common scam in which the scammer makes the calls while pretending to be a genuine financial advisor and the victim is not even aware of his identity nor does he/she know whether the person on the other end is legitimate or not.

How to Identify Fake Cryptocurrency Exchanges

There are various ways to identify the legitimacy of Cryptocurrency. Some of them are suggested as follows:

• By examining the website of any new coin or token. Once you go through their website, analyze their previous activities, study the offers given on the white paper and learn about their audit helps you to get an idea of whether it is a fake or a genuine firm.
• If the returns on investment are too good to be true, consider it an alarming call.
• Do not invest more than you expect. Genuine platforms do not deploy such tactics to get the attention of investors.
• Don’t fall for the transactions that demand high registration or withdrawal fees.
• Excessive communication from the other end, particularly those who ask you to recharge your wallet, again and again, can be a sign of a scam.
• Any kind of misbehavior of your device can be a sign of having malware-infected into it.

How do stop or avoid these Fake-Exchanges?

Well, since there are many ways to cheat practices used by the scammers it is difficult to identify or track them. Therefore, self-awareness is a must. As long as you are aware of right and wrongs, particularly while dealing with money, safety is self-ensured. If you are not so experienced you can always consult a genuine advisor or counselor and if somehow things get out of your hands, do not be afraid of reporting the Cyber Cells.

Final Thoughts

As we discussed before, the decentralized nature of online trading systems is also susceptible to many scams particularly by minting fake tokens or fake coins. Many of the platforms enable the scammer to be anonymous and few of them are pseudonymous. This is why it becomes difficult to trace the scammer. Hence, self-awareness, knowledge, and experience are necessary to trade on the DeFi platforms.