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Crypto scams and other financial markets: how to be safe
Crypto scams and other financial markets: how to be safe
Security

Crypto scams and other financial markets: how to be safe

By Giorgi Mikhelidze - 16 May 2021

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When it comes to the financial market, we can boldly say that it is changing constantly, and this can have advantages and disadvantages at the same time. We can say that those changes are the ones that help to make the process even more convenient and efficient. In the case of crypto, among the disadvantages are scams.

Fully digitization of the industry makes it even more possible. People are able to conduct any financial activities without going from home and with great convenience. 

However, there are some flaws that these changes are having for example it has increased the fraudulence and scam cases. We cannot say that the trends are all the same in each branch of the financial market, this is why the article will review the main characteristics of some of them such as Crypto and Forex, and make it clear for the readers what the main statistics of the possible scams for the future. 

Forex Scams 

Forex is relatively old in comparison to crypto and stocks and this is why people have relatively more knowledge about it than in the case of others. The market has created the opportunity to attach to the brokerage that is having a good reputation and is a great help for the people who are involved in it. However, it is very risky sometimes, and finding a broker that is approved by some of the best regulatory authorities around the world is a smart way to escape these threats. 

Customer account churning for commissions, marketing software that is meant to direct the customer to huge gains, poorly handled “managed accounts,” misleading ads, Ponzi schemes, and outright deception are all examples of fraud. It also applies to any retail forex broker who advocates foreign exchange trading as a low-risk, high-reward bet.

The US Commodity Futures Trading Commission, which oversees the country’s forex market, has noticed a spike in unethical behavior in the non-bank foreign exchange sector. Around 2001 and 2006, the CFTC investigated over 80 lawsuits including the defrauding of over 23,000 consumers, resulting in a loss of $350 million. This is why finding a reliable broker is important in order to avoid fraudulence and the best way to find a valid brokerage firm is to search for the reviews of currency trading Brokers and they can give the help anyone needs in the trading process.  In the majority of cases, the regulatory bodies have created special pages for the Forex brokers that they have approved. Traders can also view knowledge about the difficulties and issues that brokers have faced in the past, which can lead to a higher level of trader protection.

Crypto Scams 

Josh Garza, who created the blockchain startups GAW Miners and ZenMiner in 2014, admitted to being a part of a pyramid scam in a plea deal and pleaded guilty to wire fraud in 2015. Separately, the United States Securities and Exchange Commission filed a federal compliance lawsuit against Garza, who was ultimately sentenced to pay a $9.1 million penalty plus $700,000 in interest. Following its closure, a class-action lawsuit for $771,000 was filed in 2018 against BitConnect, a blockchain network that had a platform for supporting YouTube channels. (36th) The promise of significant monthly returns was cited in previous fraud alerts and cease-and-desist notices provided by the Texas State Securities Board in relation to BitConnect. 

We can say that it is impossible for now for the High Authority to regulate the crypto-industry as the transactions cannot be tracked and the process is conducted anonymously, so nobody would guarantee safety in this field for you. If you end up sending your money to someone you did not want, it is impossible to take a step back and to receive it back. There are some ways to avoid these cases, for example not to trust anyone who is calling on the mobile phone and asks for your personal information or tells that can provide you with the proper help. Moreover, you can also set the two-factor authentication on your account and feel more secure. 

Summing it up

Finally, to sum up, even though the financial market is an industry we imagine as a whole, there are a lot of differences between several of its branches. Even though they also have a lot of similarities, for example being risky to become involved in the market if you do not have the proper knowledge, the risks are different and executed in many different ways. For example, we can boldly say that cryptocurrencies are the most likely to make people scammed because transactions are made in several seconds, it is impossible to track who did it due to the decentralization of the system and guaranteed anonymity. Scams are happening in many cases, for example, while being involved in the forex or stock markets, but in the case of crypto, it is way more difficult to come out of the situation as the market is not regulated in comparison to others. 

This is why it is important to raise awareness about security issues and make people more knowledgeable about the possible risks. 

Giorgi Mikhelidze
Giorgi Mikhelidze

Giorgi is a Georgia software developer with two years of experience trading on the financial markets. He is now working to spread the knowledge about the Blockchain in his country and share all of his findings and research to as many crypto enthusiasts as possible.

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