The following chapters offer a small introduction to popular broker scams and how they work. Please read through this section carefully and see if anything applies to your situation.
Unregulated Brokers & Exchanges
There are hundreds of unregulated exchange platforms and brokers that allow users to exchange cryptocurrency. Too often, these platforms will promise unrealistic signup bonuses with your first deposit and claim they already have a large userbase actively trading on the platform. Only once you start trading you will realize how difficult (if at all possible) it is to withdraw your funds. Here’s how you can recognize and avoid unregulated exchange platforms:
No information about their license to operate as a cryptocurrency exchange.
Claims to allow anonymous cryptocurrency purchases and transactions with unlimited amounts.
No information about the fees and commissions you are expected to pay.
Offers very large bonuses for new users only after depositing their funds to the exchange wallet of the platform.
Claims to have large amounts of traffic when it actually doesn’t. You can easily check this with SimilarWeb.
Important! Licensed platforms will never ask customers to deposit funds in order to withdraw the profit.
All commissions on the withdrawals are paid automatically during the process, not by sending the sum of commissions to an agent or a platform
Arbitrage trading systems
Arbitrage trading bots are no longer popular but still come up from time to time. These systems claim to automate your buy/sell transactions on different platforms to profit from arbitrage opportunities. However, most exchanges do not confirm withdrawals instantly, which in turn leads to near-certain losses for the user. It is best to avoid each and every trading bot unless it has a proven track record from real users which you can reach out to directly.
Cloud mining scams
Cloud mining allows investors to participate in mining operations without having to invest in mining hardware. Users rent server space and hash rate in order to mine altcoins, which are then stored in a platform's web-based wallet. Most cloud mining services will not allow you to withdraw your hard-earned cryptocurrency, and by the time you attempt to do so, you will have already lost a significant amount of money by paying rent. Here’s how you can recognize and avoid mining scams:
What are users saying on trusted third-party review platforms? If there is no information or “too good to be true” information, it is best to avoid it.
The expected mining returns are much higher compared to traditional mining.
There is no information with regard to fees, especially for withdrawals.
The platform claims guaranteed profit (no authentic company does this).