In today’s Exponential Investor…

  • An important email
  • Yellen and her thoughts on crypto
  • Was it a scam or not?

Sam,

Do you have any concerns about GTLOT? They are keen for me to open an account 

Tks

This was waiting for me in my inbox on 17 December 2020 (name removed for anonymity).

Straight away, I had a pretty good suspicion as to what was going on.

This subscriber was about to be scammed.

I couldn’t be sure though. It meant I had to do a little bit of research, just to confirm my suspicions. Either way I had to help this person try and avoid a crypto trading scam.

Yellen at crypto

Last week, the US swore in a new president.

There was also a Senate Committee on Finance hearing with testimony from the nominated Treasury secretary, Janet Yellen.

Yellen made comment about several things, but what many people wanted to hear was what she would say about cryptocurrency. Now, the mainstream would have you believe she said it should be “curtailed”.

The more grandiose headlines will say she wants it shut down. That’s wrong. When you read her written responses you can see what she really thinks.

Rather than abbreviate her response, here it is in full. When asked about the potential threats and benefits of innovations like cryptocurrency, here’s what she replied,

I think it important we consider the benefits of cryptocurrencies and other digital assets, and the potential they have to improve the efficiency of the financial system. At the same time, we know they can be used to finance terrorism, facilitate money laundering, and support malign activities that threaten U.S. national security interests and the integrity of the U.S. and international financial systems. I think we need to look closely at how to encourage their use for legitimate activities while curtailing their use for malign and illegal activities. If confirmed, I intend to work closely with the Federal Reserve Board and the other federal banking and securities regulators on how to implement an effective regulatory framework for these and other fintech innovations.

That’s not someone who wants to shut it down. That’s someone who wants to appropriately protect the system without stifling innovation.

The irony is the system she’s trying to protect is fundamentally flawed anyway, which is why crypto exists. There’s more to that conversation another day.

But she is right in saying there is risk in the cryptocurrency system, risks and dangers that need to be appropriately taken care of. Right now there is no real regulatory framework to protect people from these risks.

Risks such as scam trading operations looking to rip and fleece people of their wealth. Until there is appropriate regulatory framework for those who operate in the crypto space, these scammers continue to pose a threat.

That’s why we try to take on a self-regulatory approach and try to help people avoid scams where we can. That’s why I always encourage you to write to me if you’re uncertain about something that seems fishy.

With over a decade experience in crypto now, I can spot a scam a mile off. That’s exactly why when I got that email in my inbox on 17 December 2020, I had to help.

Scam proven

I dug a little deeper into GTLOT as the subscriber had mentioned. It was pretty easy to see its game.

I quickly replied to the subscriber.

They appear a little dicey to me. The fact you say they’re, ‘keen’ for you to open an account is already a red flag.

It appears they’re one of these unregulated FOREX brokers that ends up doing who knows what with your funds.

Also there’s enough material with a quick search to suggest it’s probably not the best idea to have an account and trade with them.

Regards,
Sam

Now, the reason I’m telling you about this today is simple. It’s one thing for me to tell you about a scam. It’s easy for me to see it and describe it. But I think it’s also beneficial for you to hear from someone like you who’s still getting used to it all.

This is someone who’s on a pathway of discovery still, but is utilising our expertise as I’d hope. I hope that by hearing this story from someone like you, that this sinks in and helps to ensure you don’t fall for these scams either.

Then, last week, I got a response and follow-up from the subscriber,

Sam

Your advice below was spot on. Sad story follows… but a cheap lesson!! 

I decided out of interest to open a Glot account with the minimum £200 just to see how they operate. 

The guy Matthew Thomsen was VERY persuasive to get me to invest more but I stuck with the minimum to see how it worked. He succeeded in almost making me feel guilty! 

Within 10 days he made 3 trades. One he closed at a small profit but the other two he left open and they closed automatically when all my funds had gone. He lost 96% of my cash in 10 days. 

I complained – but it was my fault for not investing more!!

I put a stinging review on Trustpilot which he did not like and asked me to remove. I refused saying it was factually correct. I had written off £200 as a cheap lesson but 3 weeks later he has come back with a proposal to refund my cash but in the form of bitcoin into my private bitcoin wallet which I keep on Bitpanda. He wants my Bitpanda Bitcoin wallet identifier.

Is it safe to give him this? If there is any risk should I empty the wallet first.

For what it’s worth I said to not give them any more details. Instead, to use a “burner” wallet. A one-off BTC wallet that can receive the purported BTC and then be never used again. To give them that public address (nothing more) and see what happens.

I wouldn’t expect much.

Again, this is a common situation. These “trading systems” from what are really unregulated Forex brokers are often dicey scams. Often they’re not even Forex brokers – many times they’re just intentional scam sites.

They’re rife, in both crypto and in the traditional financial system. You need to be aware of them, their tricks, their tactics and how they work. If you’re ever unsure, always ask before starting off in any of these things.

It’s always better to be safe, than ultimately sorry, which is almost always the end case with these scams.

Regards,

Sam Volkering
Editor, Exponential Investor