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By Shedrach Kongvong
Introduction
Crypto scams are skyrocketing as the industry continues to grow. This isnât surprising, as thereâs always evil accompanying any good thing.
Although they may not seem common, fake crypto exchanges are everywhere, which means your investments are at risk.
But don't worry, weâve got your back. Because you found your way to this page, youâre ten steps ahead of those scammers seeking to take your hard-earned money. Read on to discover how to spot the fakes and stay safe and secure in crypto.
Common traits of Fake Exchanges
There are common traits associated with fake exchanges. The following are the most important ones to look out for.
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Lack of proper licensing: Fake exchanges are usually not duly registered or regulated. Most crypto exchanges take custody of your funds. If they are not willing to be regulated, they have something to hide.
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Unclear or hidden team information: Iâve seen a few times on Reddit where âfoundersâ of crypto projects ask random people to sell their photos for use in their team member section. This is typical of fake crypto exchanges whose teams have plans of escaping with your funds.
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Unrealistic promises and returns: Though not on exchanges, Iâve fallen victim to unrealistic promises before. Exchanges can also do the same. They may promise you a huge signup bonus or some unrealistic return on investments.
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Poor user reviews and feedback: Fake crypto exchanges have poor reviews from those who have used them before. Such users may have fallen victim and are sounding a warning to others.
Examples of Notorious Fake Exchanges
The following are some of the fake exchanges in the history of crypto. While regulators have shut all of them down, they are a reminder that fake exchanges are real.
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BitKRX: This was a fake crypto exchange masquerading as a branch of legitimate trading platform, KRX in South Korea. The founders wanted to use it to defraud unsuspecting investors using KRXâs reputation, thank God they got caught early.
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Komid: Komid was also a fake South Korean crypto exchange. The platform was notorious for scamming users from the start by faking trading volumes. Komid was shut down and its executives sent to jail.
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Phemex.icu: Regulators found this fake crypto exchange to be impersonating legitimate crypto exchange, Phemex. One victim deposited $52,000 and couldnât withdraw until he paid huge âtaxesâ. Even then, he couldnât withdraw.
How to Identify and Avoid Fake Exchanges
How do you identify and stay away from a fake crypto exchange? Here are five simple ways to do it.
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Checking for proper licenses: Before you send your funds to any crypto exchange, verify that it is registered and regulated by the relevant authorities. Such regulated platforms canât just take your money and vanish.
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Verifying team information: It is so important to check that the team behind a crypto exchange is reputable. Exchanges with team members clearly revealed are less likely to be fraudulent.
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Looking for reviews from credible sources: Most investors overlook user reviews and feedback. Such reviews are however major warnings from those who have suffered at the hands of fake crypto exchanges if they are negative. On the other hand, only accept positive reviews from credible sources as good reviews may also be faked.
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Avoiding promises that sound too good to be true: There is a saying that âif it sounds too good to be true, it probably is.â If they exchange promises returns on investment that sound unrealistic, it is most likely a scam. Donât be greedy.
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Checking for Security audits: One other important way to avoid a fake crypto exchange is to check that it has gone through proper security audits. Exchanges that have done this will proudly talk about their certification. If thereâs no such information, itâs probably because thereâs no such audit.
What to Do If Scammed
We have shared how to avoid becoming the next victim of a fake crypto exchange, but what if youâre already a victim? You can help by:
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Reporting to authorities: If you are a victim of a fake crypto exchange, you have a responsibility to report such an exchange to the authorities. Donât wait until others fall victim too, help others to avoid this.
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Sharing experiences to warn others: Another way you can help is to share your experience with others. You can easily do this by writing reviews on the fake exchange anywhere youâre able to â social media, in their comment section, etc to keep others off it.Â
Conclusion
Fraudsters know that the crypto is booming with new investors coming in, and they use fake exchanges to get some of the unsuspecting investors.
It is therefore important to be thoroughly informed about the industry and to exercise caution. There is such a thing as doing your own research (DYOR) in crypto, and you should do it. It may be painful doing such research, but it is worth it in the end as it keeps you safe from scammers.
Author Bio
Shedrach is a big fan of crypto and blockchain technology. He has been in the industry since 2018 as a writer and user of crypto. You can reach him at shedrach@shediwrites.com. He also writes about writing on his website Shediwrites.com.Â
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.