How to tell a fake from a real bitcoin exchange
The primary way to tell if a bitcoin exchange is legit is by verifying the company’s assets. That means you should use solid and working tools to verify the exchange’s wallet, accounts, and customer accounts. You can also try the following:
Read through the company’s website. If it looks generic, unscrupulous, or nonexistent, this is a red flag.
If it looks generic, unscrupulous, or nonexistent, this is a red flag. Verify the exchange’s finances. Don’t be afraid to ask the exchange to send you some screenshots of their bank statements and trading history. Use the information that you collect to validate your idea of the exchange’s integrity.
Don’t be afraid to ask the exchange to send you some screenshots of their bank statements and trading history.
Why you should be wary of a new cryptocurrency company
In April 2017, Ryan Selkis, an analyst and director of marketing for Centra Tech, claimed that Centra was in the process of making an initial coin offering (ICO), which is an unregulated process that has been linked to fraud. Soon after, users, fellow cryptocurrency startups, and cybercriminals accused Centra of selling a fraudulent token, known as CentraCoin, and laundering money through it.
The company has denied the allegations. The mysterious Selkis’ social media accounts were deleted soon after, and he was accused of having received hundreds of thousands of dollars in kickbacks.
Centra’s CEO and co-founder Amir Taaki claims that he did not solicit the sale of a token that was described as the first Ethereum-based debit card, and that he’s not associated with Selkis.
How to identify a scam or a legitimate cryptocurrency company
Before you consider joining a cryptocurrency startup, consider the company’s track record and their philosophy. Are they bullish on cryptocurrency, or more skeptical? Are they excited to enter the industry or are they settling for another field? If they say they will make a cryptocurrency in 24 hours, will they actually do it?
You can do research in a number of ways. Reddit, for example, allows users to submit posts to the CryptoCurrency subreddit that are tagged as “cryptocurrency.” There you can discuss or analyze the data on the site. Ask your financial advisor for a recommendation. Ask your friends and family for recommendations. Examine their work history.
What can I do if I’m scammed?
To protect yourself from cryptocurrency scams, keep a tight watch over the companies you’re considering, using sites like Know Your Company or ScamSearcher. The services allow you to see if they’re a legitimate service or an outright scam. You can also look for any lawsuits against the companies. With this information in hand, you’ll be more likely to make the best decisions about investing in a crypto startup. It can be difficult to spot legitimate startups, so don’t wait to research if a startup appears too good to be true. If it does, it probably is.
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Have you been scammed using cryptocurrency? Comment below and let us know.
Do the proper research on cryptocurrency scams
There are hundreds of sites all claiming to be the authoritative source on cryptocurrency investment, which is probably why there are so many scams floating around out there. However, some sites are more trustworthy than others. The safest and most reliable way to find trustworthy sites is to go with reputable, reliable sources.
When you’re looking into cryptocurrency startups, consider looking through an online search engine. Start by going to a website’s About Us section to get an idea of what the site is all about. You might also consider going through the pages of respected publications for more advice and information on the cryptocurrency scene.
Another great resource is a forum.
Contact law enforcement and your local regulator
As with any investigation, you should report your suspicions to your local law enforcement. Don’t be afraid to reach out to the FBI, DEA, Secret Service, or local law enforcement to take a look at your potential Bitcoin startup before you make any major investments. Ask them to run a criminal background check, fraud report, or trademark or patent search. In addition, it’s a good idea to contact your local economic development office or anti-money laundering group to make sure your company is operating in line with local laws and regulations.
Like any business, it’s always a good idea to conduct a good background check on any potential investor or partner. Only send money to individuals that are vetted by you. Learn more about who to choose for your investments.