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Cryptocurrency Scams: Recover Your Lost Funds

No matter how hard governments try to regulate it, the Cryptocurrency industry is still alive and kicking. Since the topic is quite ambiguous to the general public, frauds use it to scam people out of their money, with what looks like a genuine investment opportunity. If you fell into a Cryptocurrency scam, please contact us now. Although it is extremely difficult to recover money from Crypto scams, we will give you our honest evaluation of your case, and if possible, we will give it our best effort to recover your money
 

What is cryptocurrency?

Cryptocurrency has quickly become one of the most fascinating and volatile financial asset classes in the markets. As an investment, Bitcoin has had one of the highest returns in history. Bitcoin was created when the first significant impacts of the Great Recession were felt. Bitcoin was designed to be a source of value and a medium of trade, a decentralized virtual currency with a truly fixed supply to combat the rampant money printing by central banks. Bitcoin can be decentralized because of the blockchain technology and the distributed ledger.

Is cryptocurrency a scam?

Cryptocurrencies are the Wild West of investing and speculation. It is vital to work with a virtual currency platform that is reputable and – ideally – regulated. Thankfully, in 2020, there has been ample time for reputable cryptocurrency exchanges to develop. Perhaps the most well known, respected, and trusted is Coinbase. Other notable and trustworthy crypto exchanges are Bitstamp, Kraken, Binance, and Bittrex. But don’t take just our word for it! Do your due diligence and make that regular habit when it involves cryptocurrencies!

Cryptocurrency Exchange Scams

When Bitcoin and others became a tradable market, there were few exchanges that were available. As time went on, more and more exchanges popped up. But not all of these cryptocurrency exchanges were legitimate. Many were fronts that looked and appeared to be a place to buy and sell cryptocurrency. The owners of the exchange would wait until a significant amount of people deposited and even began to trade on their platform until the owners would essentially pull the plug and take your cryptocurrency investments. Along with cryptocurrency exchange scams is the lack of security of some cryptocurrency exchanges. The most infamous example of this occurred in 2014 when Mt. Gox (which processed over 70% of all traded Bitcoin) had 850,000 Bitcoins stolen (millions of dollars). Regarding fake cryptocurrency exchanges, there are some that use fake volume to artificially inflate the trading volume and liquidity of the exchange. While this activity is still prevalent, a form of self-policing in the industry exists with the website coinmarketcap.com classifying every cryptocurrency exchange as those with honest reported volume or dishonest volume.

Pyramid Schemes

If you want to learn an excellent example of a pyramid scheme in the cryptocurrency space, look up OneCoin. Pyramid schemes in cryptocurrencies are the same as Ponzi schemes in any other market; the only difference here is that the fraudsters are now capitalizing on the growth of cryptocurrencies to target you and make you believe you’ll become wealthy overnight.

Pump and Dump scams

A scam that is almost endemic in the cryptocurrency space are pump and dump schemes. Similar to what happens to stocks, pump and dump scams involve an individual or entity acquiring a large amount of an alt-coin and then pushing positive news (fake or real) to encourage as many people to buy as possible. Social media platforms are the primary outlet that pump and dump operators utilize. Once the price has moved up, the operators sell at the top and then let everyone else suffer the consequences of rapidly falling prices.

How to avoid cryptocurrency scams

  • Verify websites and research the background of people involved in the cryptocurrency. Avoid anything that seems vague or is not clear. Don’t be taken in by flashy and sophisticated web sites. Like people, it’s what’s on the inside that counts.

  • Use reputable and regulated exchanges.

  • Consults experts in the space or speak with your financial advisor before investing any money in cryptocurrencies.

  • The temptation to become wealthy overnight in this space is big. Don’t fall victim to false promises and flashy sales pitches.

  • When looking for a cryptocurrency exchange to buy and sell cryptocurrency, make sure it is regulated and licensed. Additionally, make sure that your deposits are insured against theft or loss. Any reputable and legitimate exchange will have insurance as well as store their digital wallets in cold storage (off line).

  • Be careful about leaving cryptocurrency on any exchange for any long period of time. If you have purchased cryptocurrency in order to trade it, then leaving it on an exchange is safe. But if you plan on investing and holding certain cryptocurrencies over a period of years, consider purchasing a cold-storage hardware wallet.

Crypto Scam FAQ

Scammers and fraudsters exist everywhere, and this is especially true when it comes to Bitcoin. As a brand new asset class, be very careful when it comes to opportunities in this investment space.

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