Beware of Crypto Trading Scams

Although Bitcoin – the first and still the de-facto cryptocurrency of choice, was released back in 2009, it wasn’t until the late bull-run of 2017 that the industry achieved wide-spread awareness. During this period cryptocurrencies saw remarkable growth, with Bitcoin reaching its all-time high of just under $20,000. Those who were fortunate enough to invest in cryptocurrencies during the early years were the lucky ones. On the contrary, those who jumped on the crypto band-wagon for fear of missing out were not so lucky.

As the crypto space has quickly become a multi-billion dollar industry, those attempting to scam unsuspecting newbies are on the rise. Here’s a brief overview of some of the most common scams to look out for and how you can avoid them.


A separate craze that has also taken off are initial coin offerings (ICO’s). In the first three months of 2018, more than $6 billion was raised by new crypto projects, eclipsing 2017 in its entirety. However, many of these ICO’s have no desire to achieve their objectives in the long-term. Instead, they are simply attempting to raise as much cash as possible with the view of scamming their unsuspecting investors.

One such example of a fraudulent ICO was Centra – a project endorsed by boxing legend Floyd Mayweather. Although the fund raising campaign raised the cryptocurrency equivalent of $30 million, the project turned out to be nothing but a scam.

Prior to parting with your money, you should always conduct through research in to the credentials of the project leaders. If you can’t find anything to back up their claims, stay away.

Crypto Trading Experts

On top of ICO scammers, you will also come across a selection of so-called cryptocurrency trading experts. These people have a strong following in the public domain through platforms such as YouTube, Twitter and TeleGram. This is not to say that they don’t have an element of knowledge in the industry, it’s just that they aren’t talented enough to make trading profits on their own.

However, this isn’t actually a requirement, because their main objective is to leverage on the desire of the masses and create a good story around it. You have to ask yourself an important question. If these experts are so good at predicting the markets and subsequently making so much money – why are they giving away their tips for free?

As you might have guess – they’re not! They will lure you in through a variety of YouTube discussions and then ask you to join their premium VIP channel to receive real-time trading strategies. If you want to trade the markets, you should first engage in a significant journey of research. Never pay to receive expert trading tips as you can never guarantee that they will be as good as they say they are.

Pump and Dump Schemes

One of the fastest growing cryptocurrency scams appears to be pump and dump schemes. This is the process of artificially pumping money into a particular cryptocurrency with the aim of boosting its price. When the rest of the markets see that a coin is making huge gains in little time, others jump on. Pump and dumps are not unique to the cryptocurrency markets as they also affect the real-world stock exchanges. However, they are fundamentally illegal.

For example, in February 2018, a cryptocurrency called E-coin soared in value by 4000% in just 24 hours, only for the coin to revert back to its original price the following day. Many put this down to a classic pump and dump activity, with no fundamental news to explain the sudden increase in price. You should never invest in a cryptocurrency just because you see the price rise. Do your own research and if you can’t find a reason to support the increase, stay away.

Money Making Products

The cryptocurrency markets are full of snake oil salesman selling their secret formula to make free money. But why? The simple fact of the matter is that it is extremely easy to manipulate people when you are targeting their wants and desires. People want to earn easy money and when they hear what they want to hear – they fall for it. When you have an audience of 1,000 individuals that are looking for money making opportunities, then you will also find a select few that are willing to take the risk and part with their cash.

For example, there is a major scam circulating the web that claims to have a relationship with the multi-millionaire panel of Dragons Den (A popular UK investment program). The scam artist claims to offer a new and innovative trading system that requires a minimum investment of £250. Many people fall for the scam because they see the association with the Dragons Den cast. However, ‘investors’ will never actually receive the trading system, as it doesn’t exist. If a product or service seems too good to be true, then it probably is.

Shady Cryptocurrency Exchanges

Cryptocurrency exchanges allow people to buy, trade and sell a range of cryptocurrencies. As the middleman between purchasers and sellers, the cryptocurrency exchange will make a profit from trading fees. Long gone are the days of M.T. Gox – the first and original platform that allowed people to exchange real-world cash for Bitcoin, as there are now hundreds of cryptocurrency exchanges offering their services.

However, not all of these are legitimate businesses. The main issue is that exchanges are not regulated in the same way as real-world brokers, meaning that the barrier of entry for new platforms is ultra-easy. For example, in 2014 – cryptocurrency exchange MintPal reported that it had had its centralized servers hacked.

However, upon an external law enforcement investigation, it soon became apparent that the company CEO Ryan Kennedy had scammed his customers and he was subsequently arrested. Only ever use an exchange that has a long-standing reputation and never store large quantities of coins within their respective online wallet.

Trading Bots

Cryptocurrency trading is now a multi-billion dollar sector. It is not uncommon to see daily trading volumes exceed $15 billion – more during busy periods. However, the vast majority of trading is experienced during the week, as traders take the weekend off. As a result, this leaves weekend trading to highly advanced algorithmic bots.

These trading bots are so well-programed that they have the ability to manipulate the markets. They set traps by either pumping the value of the coin up or down, leaving unsuspecting investors to follow the trend. However, the bots are then able to profit off of their manipulation by closing trades in real-time.

If you are serious about trading, it is probably best to avoid the markets at the weekend. This is because historical technical patterns often go out of the window, leaving your skills to go untested.

Conclusion – Crypto Trading Scams

Ultimately, you need to constantly do your own research prior to parting with any money and if you do, you will avoid lining the pockets of scammers. If you follow our advice, you will have all the tools necessary to avoid such practices. Stay safe!

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