Prevalent Crypto Trading Scams and How you can Avoid them
It is quite simple for anyone to think that every individual is getting rich in cryptocurrency trading. A number of scammers take full advantage of crypto trader greed with doubtful services and products. The following are some of the most common scams that you should know of:
ICOs (Initial Coin Offerings)
Initial Coin Offerings are basically fundraising mechanisms for cryptocurrencies that have been newly launched. Traders in Initial Coin Offerings receive tokens in the new endeavor. A number of ICOs have managed to launch with certain predicaments:
- Although numerous Initial Coin Offerings are 100 percent legitimate, most of them have no real technology or business plans behind them.
- Some of the Initial Coin Offerings launch with a bit more than a whitepaper crafted by individualswith no industry or technology experience.
- Brand new altcoins at times make ungrounded claims regarding their several products.
Initial Coin Offerings Fraud
Regulating agencies, governments and law enforcement agencies have begun to crack down on Initial Coin Offerings fraud:
- The United States of AmericaSEC (Securities and Exchange Commission) has filed charges of fraud against Initial Coin Offerings that were sold on the grounds of fraudulent claims.
- China has completely banned Initial Coin Offerings sales.
- A number of individuals who are well familiar with Initial Coin Offerings fraud, including Jordan Belford (the popular “Wolf of Wall Street” person) have detailed Initial Coin Offerings as the most significant scam ever.
Unregulated Exchanges and Brokers
You would be quite surprised to know that there happen to be many number of unregulated online brokerage firms and exchanges that offer cryptocurrencies and cryptocurrencyrelated trading robots. Traders need to cautious of promises and promotions that seem too good to be true and claim to make you rick very quickly! Once you deposit your funds, most of these establishments will charge you ludicrous commissions. Alternately, they can make it a headache for you to withdraw your funds. The most terrible offenders will just pilfer your money just like that and you can do nothing about it!
How to Trade Cryptos Safely and Avoid Scams?
Because of the abovementioned scams, it is very important that you trade cryptos in a safe manner. The million-dollar question is how can you go about doing that? The following are some of the ways you can use to trade cryptos safely and avoid scams.
Very Careful Research
It is of paramount importance for crypto traders to thoroughly read reviews about various exchanges and brokers prior to opening trading accounts. It is true that the massive cryptocurrency landscape makes some news each day with new exchanges and products. Therefore, finding current and reliable information is extremely important if you do not wish to fall victim to any kind of crypto scam.
Selecting a suitable Instrument of Trade
Before trading, traders might select to purchase cryptocurrency via a broker or an exchange, but there are other credible strategies you can use to speculate on prices of cryptos as well. One such popular way is using Cryptocurrency CFDs.
So what are cryptocurrency CFDs? A few of the traders who wish to speculate on the certain price of a cryptocurrency might consider trading CFDs (Contracts for Difference). A contract for difference is a powerful financial instrument that enables traders to speculate on movements of prices rather than owning the cryptocurrenciesthemselves. Contracts for Differences are a financial product (regulated). What that means is that the brokers who provide them ought to be officially licensed by a regulatory authority.
To summarize, it is important that you are aware of the common crypto trading scams and not fall victim to them. To that end, you should follow the strategies mentioned in this article to avoid such scams and trade carefully and safely. You can also consult with your broker who can guide you better regarding safe crypto practices that will ensure you do not get scammed.