Binance: an analysis of cryptocurrency scams
Binance: an analysis of cryptocurrency scams
Security

Binance: an analysis of cryptocurrency scams

By Marco Cavicchioli - 2 Jul 2020

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Binance posted a report about cryptocurrency scams on their official blog. 

It is a report on online pyramid schemes published by Binance Sentry, and has been compiled to contribute to the overall security of the crypto industry. 

Binance Sentry is Binance’s intelligence unit, active since 2018, which analyzes risks and possible security issues, using both blockchain and open-source analysis to better understand the threats affecting this sector. 

The aim is to protect Binance’s products and services, but it can also help improve the security of the entire ecosystem, for example by identifying any funds from known thefts in an attempt to recover them. 

Unfortunately, the report confirms that there are a large number of players in this sector that operate without the respect of others, for fraudulent purposes. 

In particular, the Binance Sentry team has detected the existence of several fraudulent investment schemes that promise rapid, if not exponential, returns on investments in cryptocurrencies, forex, binary options or CFDs. 

Despite numerous warnings issued by various government financial market watchdogs and the media highlighting the risks of getting involved in such pyramid schemes or fraudulent schemes, they continue to proliferate. 

For example, the report cites warnings published consistently by the UK’s Financial Conduct Authority (FCA) or Italy’s Commissione Nazionale per la Società e la Borsa (CONSOB), which are very active in providing guidance to investors in this regard, although the volume of fraudulent initiatives is so large that they far exceed the response capacity of these entities. 

How are cryptocurrency scams created?

These schemes often target potential victims who have only limited investment experience, and present themselves under different, apparently unrelated brands, even though they are often only branches of the same fraudulent operation or organization. 

In addition, they often use lies to deceive the inexperienced victims, even going so far as to invent false consumer organizations, or fake government authorities, to divert analysis of their fraudulent activity, so as to provide reassurance or intimidate the victims.

Another characteristic that makes it difficult to mitigate them is the fact that they often operate in different jurisdictions than their victims, thus increasing the degree of difficulty of possible law enforcement investigations. 

The only way to eradicate, or at least contain, the proliferation of these scams is to share and disseminate as much correct information as possible. On Binance Academy, for example, a video has also been published with the five most common scams in the crypto sector. 

Unfortunately, however, the ideal victims of these fraudulent organizations are often very poorly informed and far removed from the authoritative sources of information in this area, and are therefore hardly reached by the initiatives of crypto professionals. 

In order for such information to reach them as well, it would be necessary for people close to them, who are aware of these dissemination initiatives, to act as intermediaries and help them access the information that could prevent them from being trivially scammed. 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 11 thousand subscribers.

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