Cryptocurrencies – Beware Of Scammers

Beware of non-transparent deals with cryptocurrencies such as Bitcoin, Ethereum & Co! Six signs by which you can recognize dubious cryptocurrency providers.

The most important things in a nutshell:

  • On the Internet and in social networks, a lot of questionable advertising circulates for investments around cryptocurrencies such as Bitcoin, Ethereum & Co.
  • Often, a very high return is promised. In most cases, however, it remains completely unclear with what one is supposed to earn money and what the business model is.
  • In many cases, it is probably a prohibited pyramid scheme in which you are supposed to recruit additional paying participants. Fraud can also not be ruled out.

The surge in Bitcoin shares has triggered a real hype around cryptocurrencies. However, in addition to reputable providers, there are also black sheep at the start, who exploit the gold rush mood around Bitcoin, Ethereum, Ripple, Cardano & Co.

Dubious companies and individuals present themselves in Facebook groups, on Instagram and in Messenger services or contact consumers unsolicited by email. They promise financial freedom, high returns or permanent passive income through cryptocurrency mining, trading or investing in new, supposedly future-oriented cryptocurrencies.

Unclear Business Models & Providers often based abroad

Yet the offers are often completely non-transparent, the business models incomprehensible. More detailed information is often only available after contacting or registering on the advertising websites. Often, however, the provider’s imprint is completely missing on the websites or the providers are based abroad – often on Caribbean island states. If you have to try to enforce your rights over this distance, you will have high costs and bad cards in case of doubt.

Consumers are increasingly complaining about providers who lure them into dubious investments with deals on Bitcoins, Ripple, Ethereum, Cardano and other cryptocurrencies. The governmental market watchdog experts are currently investigating complaints about almost 20 different providers and six different currencies.

New Slogan, old Scam: Pyramid Schemes

Behind many offers forbidden snow ball systems seem to be. For example, as a participant you are supposed to pay an entry fee or recruit new prospective customers as an “agent”. For this you are to receive commissions. Ponzi schemes like to promise investors high returns. But they need a constantly growing number of participants, because the payouts to the members are financed by the deposits of the new participants. These constructs inevitably collapse.

Fraud also cannot be ruled out – as with other financial investment offers: Once the provider has collected a large sum from bona fide investors, it disappears never to be seen again.
Six signs by which you can recognize dubious cryptocurrency providers

  • Exaggerated promises
    Ignore offers with flashy high returns or permanent passive income.
  • Based abroad
    Make sure that the provider does not have its corporate headquarters abroad. This can make it even more difficult for you to enforce your rights in case of doubt.
  • Refer friends
    Ignore requests to recruit new customers yourself, even if you are promised high commissions or returns.
  • No imprint
    Check whether the provider’s website has an imprint.
  • Lack of transparency
    Distrust non-transparent and incomprehensible business models, about which you should only receive more information after contacting or registering.
  • Unsolicited contact
    If you are contacted without having shown interest in cryptocurrencies beforehand, you should be suspicious.

Trading Cryptocurrencies is highly risky

However, even with presumably reputable offers, you should be extremely cautious. Cryptocurrencies are subject to high price fluctuations. A total loss cannot be ruled out. Bitcoin, Ethereum & Co. are not legal tender, but substitute currencies. Where they will be accepted as a means of payment and whether they will be able to hold their own on the market can hardly be reliably predicted. If you decide to trade them for profit, you should know about financial trading and the risks involved, as you can learn from the best book for cryptocurrency trading.

The German government and the German Federal Financial Supervisory Authority (BaFin) also point out the risks for investors and the potential for fraud on their websites. Transactions with “OneCoins” – an alleged cryptocurrency – for example, have been banned by BaFin and accounts of a company involved in the trade have been blocked.

Investments without risk and effort, but with enormous profits in a short time, simply do not exist. If you want to build up assets, you can reduce risks through suitable strategies such as a suitable diversification of investments. Above all, it is important that you have a long investment horizon and compare different forms of investment with each other. We show you with a checklist how you can prepare for a conversation with a financial advisor.