As someone who has been involved n a few crypto scams over the years, I’ve gone from gullible to more clued up on the signs of fraudulent crypto platforms!
My name is Anand and I’ve lost thousands by being money hungry and investing blindly without doing proper research. In this article, I’ll go through what I’ve learnt from crypto scams such as CFX, CryptoFamily, ITP and others.
I’ll tell you how to identify fake crypto platforms. I know people always say ‘do your own due diligence!’. Well, this article is your due diligence.
It’s not easy to spot a crypto scam, ESPECIALLY as platforms are becoming increasingly professional and slick. Fraudsters are more sophisticated than ever. It seems they’ll do whatever it takes to dupe people into investing more!
So here are the 9 signs to spot and avoid a crypto scam:
- 1. Unsustainable returns!
- 2. Withdrawals not occurring / delays to withdrawals
- 3. No clarity on where the returns come from
- 4. No/limited information on the founders
- 5. Incentives to get you to deposit more
- 6. Poor language and grammar
- 7. Poor communication
- 8. “Hacks to the exchange”
- 9. New promises – to keep people engaged and convinced it’s not a scam
- My Advice:
1. Unsustainable returns!
People are drawn into crypto platforms offering 1% a day, 2% a day, 2.5%, 2.8% on your money! 2.8% a day?!
When you see numbers like that it should make you think twice and thrice! Not even the best algorithms out there devised by the sharpest quantitative minds can deliver 2.8% guaranteed returns!
Not even the world’s global banks with significant resources behind them can generate those type of returns. Always question – how are they able to generate these returns?
Even if the platform claims to have found the latest strategy. Sure, those returns might be possible initially. But the market catches up. Strategies are copied and pricing inefficiencies disappear over time as more people copy that strategy or as technology becomes better.
2. Withdrawals not occurring / delays to withdrawals
The one thing customers want from a crypto platform – especially when they’ve put their trust and money into it – is money out. In other words withdrawals.
Withdrawals that occur swiftly and without hassle are most valued.
I’ve been in so many crypto platforms where taking money out proved hard or not possible at all. Typically what happens especially in MLM/ponzi scheme type platforms is that the early joiners are able to make withdrawals, but as the platform draws to its end and platform owners have already been transferred money to personal wallets – it’s the newer joiners who are at a disadvantage. They’ve just put money in, but now can’t get money out. I’ve been there.
Feeling duped and scammed because you can’t take your money out is a big downer, and it’s a massive red flag for me.
3. No clarity on where the returns come from
This is another big one. When I first joined CFX, I was like – ok I see numbers on my screen. But I don’t understand how they’re able to generate consistent returns. I even wrote to the support team to ask them to provide trading statements showing the trading gains. I wanted to see evidence of the returns, otherwise it’s just numbers on screen!
Of course, I didn’t get a reply.
Also don’t fall for the phrase ‘guaranteed returns’. Nothing in the world is guaranteed – especially trading or crypto returns. Trading involves gains, losses, big gains, small gains, big losses, etc. If a crypto platform is offering guaranteed returns, it is probably either:
- Supplementing trading returns with members’ money
- Supplementing trading returns with the liquidity pool money
- Doing NO ACTUAL TRADING and uses members’ money or liquidity pool money
All of the above are not sustainable in the long term. Either the platform will run out of money, or the founders of the platform will run away with your money!
Remember – the balance of your account you see on the crypto platform are just numbers.
4. No/limited information on the founders
As part of your due diligence you should try to find out as much as possible about the founders or CEO of the company. If you’re struggling to find this information online, then I’d be worried. If they’re running a legitimate company, why would they choose to hide?
Some founders are more open about who they are and what they’re company is capable of. I’d be more interested in investing with these companies.
5. Incentives to get you to deposit more
Remember, the numbers you see on the crypto platform are digital and not necessarily real. However you know your hard earned cash sitting in your bank account is real.
Some crypto programs will ask you to deposit an amount and they’ll add the same amount, or add 50% of that.
Don’t fall for it.
This is a way for them to get more of your money, and showing you an inflated ‘fake’ balance on your platform. Only invest with money you can afford to lose, i.e. your ‘risk capital’.
6. Poor language and grammar
If you’re reading an announcement or a message from the company and you don’t understand it fully, then usually it’s bull. Ok, English might not be the first language of the Founder – but they should have sufficient resources to write a logical statement or message. Why don’t they even try to sound professional? At least use ChatGPT to improve messages?!.
When I read Whatsapp, Telegram or messages on their platform that are missing commas, full stops or makes me read it a hundred times – that is frustrating. I know there’s something fishy behind the scenes!
7. Poor communication
Communication is something that people value. Especially when it’s consistent communication from Leaders of a company to members or customers. When communication is lacking or infrequent, it doesn’t instil confidence in the company or it’s ambitions!
If you find you’re constantly asking the Support team for answers, and you’re not getting it timely – it’s a cause of concern.
8. “Hacks to the exchange”
When a crypto platform announces there has been a hack to the crypto exchange, and trading activity or withdrawals are suspended – you should dig deeper.
Is there an actual hack to the exchange?
Is it widespread news? Check the exchange’s Twitter or Telegram accounts.
Are other crypto platforms affected by this exchange?
Could this be a cover up for theft of funds by the company itself?
One thing I’ve found with certain platforms, is when funds are stolen they tend to blame it on an external hacker. More often than not, the founder has run away with the money.
9. New promises – to keep people engaged and convinced it’s not a scam
Following a negative news event or adverse publicity on their platform, the Founders will introduce a new promise. Such promises give hope to people who are worried they may have lost their funds. These promises might be; introduction of a debit card, platform moving to a new address/app, brand new re-developed platform, etc.
Unless you can see clear communication and the evidence that they have made changes – I would treat these new promises as false promises. The intention of the promise is to put a positive spin on recent events and stop more people from reporting them to authorities.
The crypto market is risky. There are platforms that will draw you in with big promises and pull the rug under you.
The wise thing to do is to get in early on an opportunity, and get out early.
Or don’t get in at all.
I’ve learnt the hard way. My focus now is on creating digital assets myself and earning an income for myself online. I’ve chosen not to rely on third party crypto platforms.
How have I done this?
Through the principle of Authority Marketing. This is how the modern wealthy have built multiple sources of income. Discover this free training on how to create a sustainable, online business for yourself that is NOT risky and open to fraud.