How to spot a crypto scam

In today’s Exponential Investor…

  • I hope you enjoyed the docuseries
  • What a scam really looks like
  • Don’t forget we’ll help you out

I hope you enjoyed our crypto based docuseries last week, The Search for the Next Bitcoin. It was a blast putting it together and I hope that if you signed up to view it, you got a lot out of it.

But I also realised that as I was writing to you last week about crypto, I neglected to step you through one of the most important things of this market…

How to spot a scam.

I’ve talked about scams before in crypto and in the “traditional” markets. But I’ve not properly explained what they look like and ways to spot red flags for yourself.

Hence, today is a public service announcement. And while I’ve covered a fair bit on crypto in the last two weeks (for good reason if you’ve been following the market at all in the last few weeks) I will be getting back to all markets (including the stockmarket tomorrow).

But today before we switch back to “traditional” markets for a little bit, I had to share with you some more recent experience around what a crypto scam looks like and how you might best avoid them.

The common sense test

I believe that far too many people get ripped off from pathetic, lowlife scammers and I want to try and do my bit to help.

I get a lot of emails from people asking what I think of particular crypto sites, crypto trading platforms, all kinds of projects in crypto.

I encourage this – while it’s a lot to get through, there are a lot of scams out there. And particularly in crypto trading platforms.

These are platforms that encourage you to deposit money with them, and then they do automatic trades for you. Essentially they’re saying they will make you huge percentage gains in crypto from trading – when most of the time they are true Ponzi schemes.

And it’s easy to get sucked into it all. Even people who you think probably have better common sense still can’t quite spot the scams from everything else.

Let me give you an example from someone, a family member, back in Australia.

They asked me about something they had seen in their email.

It was an ABC News special report about how Andrew Forrest (one of Australia’s popular and well known billionaires) had made serious money in bitcoin.

Straightaway this rang huge alarm bells for me.

Just the mention and linking of a publicly listed company’s chairman and bitcoin didn’t seem right. But with a very brief and simple search it was easy to find this is one of the latest scams going around.

What was even more decisive about this particular scam is the fact just a day later I’d seen the email appear in my own inbox. It just seems to be one of those ones that does the rounds and before you know it it’s on your doorstep.

So, before we dissect this scam, let’s take a look at it. There’s a good chance you’ve also seen a variation on it, but likely a “BBC News” special report about how Richard Branson made huge money from bitcoin.

Here’s the Aussie version anyway…

Source: screenshot from editor’s email

On the face of it, this looks reasonably legit.

It looks like a report from the ABC News site. It’s got “As seen on” and Channel 10, 60 Minutes, SMH, Sunrise, The Project, all mainstream mass market news outlets. Then there are even “reader results” over to the side.

It’s a special report which is designed to get your interest. And the pictures of the popular “celebrities” give it credibility.

There’s even a semi-legit looking email address on the “From” field. Don’t be fooled by all this. It’s not from a real email address.

Let me be clear, this is a scam.

And the variations you see from major news sites, like the BBC, aren’t actually from them at all. These reports never existed.

What happens is the images and text, everything, links out to a scam site.

These often carry deferent names like “BTCfuture” or “cryptotradinggold” – some kind of shady style address which is for a “trading” site.

And there on the scam site are all the tricks and trappings of a scam are front and centre, fake news report, fake “security” images from the likes of Norton and McAfee designed to make you think the site is safe and legit.

There’s also often countdown clocks with a fake registration deadline. That is supposed to get FOMO kicking in. Loads of stock images, fake testimonials, fake “profit results” – everything is fake and fraudulent.

This is what a scam looks like. None of these things have backup, justification or evidence behind them.

I had other variations of this sent to me from a close friend as well. Not long after the first email.

This other variation was promoting this thing called “Bitcoin Aussie System”. She wanted to know if it was real or not.

Well I broke it to her gently that the chances were this “system” was some kind of convoluted scam to sell some kind of software that likely didn’t work.

These scams are very common around these bitcoin trading systems.

The truth is, it’s all fake.

It doesn’t take long to do a Google search on something like “Richard Branson bitcoin” to find a blog post from the man himself warning about these bitcoin trading schemes.

But there’s load of red flags on these that apply to other scams of similar nature.

What you need to do is get comfortable with how these things look and how to spot them.

Often you’ll see things like this that are tweaked and tailored for different regions, different companies, wealthy people and news outlets.

As I say, I’ve seen similar things with the BBC across the headline. Or ones that purport that wealthy famous people like Elon Musk or George Soros use these systems. You need to treat all these things with a huge degree of scepticism.

In this instance, the fact the whole page links to the bitcoin future trading scam is one red flag. The ABC, BBC, CNBC – all the C’s – would never link out to something like this.

None of the image links work, again, this indicates this is one image rather than a properly constructed news site article.

You should always check the email address from the sender too. In my example above, while the email “From” field looks legit, when you closely look at it, it was actually from an email, elvyyqn@olanias.de.

Again, a quick search doesn’t come up with a company olanias.de anywhere. Furthermore the contact in Outlook had absolutely no information in it whatsoever – and it’s unsolicited and clearly smells of a scam.

Even the links on the images were weird, jumbled nonsense weblinks. If it looks dodgy, and the links look dodgy, there’s a good chance it is dodgy.

That’s why it’s vital you check links in emails. We don’t ever suggest clicking on them unless you know how to manage your own security. But you can search for them on Google and get a good idea of what’s legit and what’s not.

Don’t forget you’ve always got me

Also, one of the best ways to verify these fake reports is to open a new browser window or tab and go to the original site. In this instance, ABC News, and search for the report.

If I go to the ABC News website and search “Andrew Forrest latest investment”, nothing comes up. There are news reports on Andrew Forrest and investing, but nothing like this.

There are reputable, ethical, professional services, platforms and advisories out there. They can be easily found, contacted, have real people to view, the links are from the page, they have licences and authorisations from regulators, and these can be cross referenced against the regulator website searches.

You can find information about the company, about the people, about the services, there are contact details and other avenues for contact including social media where questions and queries will be answered.

If you can’t get any of that, then its red flag city, folks.

Anything that promises that you can get a huge daily return on bitcoin for doing nothing is also a scam. There are some crypto where this is possible, via staking crypto that employ variations on proof-of-stake consensus. Bitcoin doesn’t do that, it’s proof-of-work and you have to mine it, buy it or trade for it to get it.

But as I say, if you’re worried or unsure about something – there’s always us if you’re not 100% sure you’re being scammed or not.

If you’re worried about something or you’re not sure about it, then reach out to us and we’ll tell you. We’ve been around long enough to know what’s an outright scam or not.

You can email me with concerns or questions as sam@southbankresearch.com about potential scams or reach out to us on social media. To help keep your crypto experience that little safer we’re always available to help where we can.

In traditional markets, in crypto, in property, stocks, money markets, currency, everywhere, you must be on your toes. You need to be vigilant; you need to be sceptical about everything and you need a bit of experience and assistance, which is where we come in as well.

Be safe, be smart and be cautious and be open with us to help us help you navigate the crypto and investment worlds.

Regards,

Sam Volkering
Editor, Exponential Investor

Category: Cryptocurrency

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