Is cryptocurrency scam
Too many bitcoin exchanges have experienced spectacular heists, such as NiceHash and Coincheck, or outright fraud, such as Mt. Gox and Bitfunder. SEC and CFTC staff have recently observed investment scams where fraudsters tout digital asset or “cryptocurrency” advisory and trading businesses. So-called “pig butchering” is when a scammer builds up trust with their victims before eventually pressuring them to deposit more and more of. FOREX MMCIS GROUP UA
In other instances, the ICO itself may be at fault. Founders could distribute unregulated tokens or mislead investors about their products through false advertising. Rug Pulls A rug pull occurs when project members raise capital or crypto to fund a project and then suddenly remove all of the liquidity and disappear.
The project is abandoned, and investors lose everything they have contributed. Cloud Mining Scams Platforms will market to retail buyers and investors to get them to put upfront capital down to secure an ongoing stream of mining power and reward. These platforms do not actually own the hash rate they say they do and will not deliver the rewards after your down payment. While cloud mining is not necessarily a scam, due diligence must be conducted on the platform before investment.
How to Spot Cryptocurrency Scams Cryptocurrency scams are easy to spot when you know what you're looking for. Legitimate cryptocurrencies have readily available disclosure, with detailed information about the blockchain and associated tokens. Read the White Paper Cryptocurrencies go through a development process. Before this process, there is generally a document published for the public to read called a white paper that describes the protocols, blockchain, outlines the formulas, and explains how the entire network will function.
Fake cryptocurrencies do not do this—the people behind them publish "white papers" that are poorly written, have figures that don't add up, tell you how they envision the money being used or don't generally seem like a proper white paper. For comparison, you can read through the white papers of well-known cryptocurrencies such as Ethereum and Bitcoin to see how they are written and explained. Identify Team Members White papers should always identify the members and developers behind the cryptocurrency.
There are cases where an open-source crypto project might not have named developers—but this is typical for open-source. Most coding, comments, and discussions can be viewed on Github or GitLab. Some projects use forums and applications like Discord for discussion. If you can't find any of these and the white paper is full of errors, it is likely a scam.
Look For "Free" Items Many cryptocurrency scams offer free coins or promise to "drop" coins into your wallet. Remind yourself that nothing is ever free, especially money and cryptocurrencies. Examine the Marketing Cryptocurrencies are generally not a money-making endeavor. They are projects with a stated purpose and have coins or tokens designed to be used to help the blockchain function. Valid crypto projects won't be posting on social media, pumping themselves up as the next best crypto you shouldn't miss out on.
Most valid cryptocurrency developers do not market the coin; they post documentation that outlines the cryptocurrency's purpose. If it doesn't have a purpose, it is likely but not always a scam. It might be a cryptocurrency just to be a cryptocurrency, similar to Dogecoin , which has no official purpose. There are legitimate businesses using blockchain technology to provide services.
They might have tokens used within their blockchains to pay transaction fees, but the advertising and marketing should appear much more official. They'll have money to spend on celebrity endorsements and appearances and have all the information readily available on their websites. These businesses will not ask everyone to buy their crypto; they will advertise their blockchain-based services. How to Avoid Cryptocurrency Scams There are several actions you can take to avoid being scammed.
If you notice any of the signs, you shouldn't click on any links, dial a phone number, contact them in any way, or send them money. Additionally: Ignore requests to give out your private cryptocurrency keys. Those keys control your crypto and wallet access, and no one needs them in a legitimate cryptocurrency transaction.
Ignore promises that you'll make lots of money. Ignore investment managers who contact you and say they can grow your money quickly. Ignore celebrities—a celebrity will not contact people about buying cryptocurrency. Meet your romantic interests in person before giving them money if you're using an online dating website or app. Ignore text messages and emails from well-known or new companies, saying your account is frozen or they are worried about it.
If you receive an email, text, or social media message from a government, law enforcement agency, or utility company stating your accounts or assets are frozen, and you'll need to send crypto or money, contact the agency and ignore the message.
Ignore job listings to be a cash-to-crypto converter or crypto miner. Do not fall for claims about explicit material they have of you that they will post unless you send cryptocurrency, and report it. Don't accept "free" money or crypto. How to Report Cryptocurrency Scams Several organizations exist that can help you if you're a victim of a cryptocurrency scam or suspect one. Use their online complaint forms to seek help: Commodities Futures Trading Commission complaints and tips U.
They might have fraud prevention or other measures in place to protect your crypto assets and money. What Are Common Bitcoin Scams? The most common scams are rug pulls, romance, phishing, and investment schemes. They even go as far as entering into fake relationships through dating apps like Tinder.
What Are Crypto Scams? Crypto scams are like any other financial scam, except the scammers are after your crypto assets rather than your cash. Crypto scammers use many of the same tactics employed in other financial crimes, such as pump-and-dump scams that lure investors to purchase an asset with fake claims about its value or outright attempts to steal digital assets.
Types of Crypto Scams Crypto scams can take many forms. Here are a few of the most common examples. Whatever role is assumed, they promise to grow your investment if you transfer your cryptocurrency to them. If you follow through with their request, kiss goodbye to your crypto. Investment scams include pump-and-dump schemes. When you buy, the price rises, at which point the scammer dumps their holdings at the new higher valuation, which causes the price to collapse, leaving you and any other victims underwater.
But a little bit of momentum can drive it up the charts on sites like CoinMarketCap. To spot an investment scheme, look for promises of excessive profits or zero risks. These schemes often begin on social media or online dating sites, so be wary of anyone contacting you out of the blue about your crypto assets. Watch out for anyone talking up a particular crypto asset on Reddit or other social media platforms, too.
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Is cryptocurrency scam fibonacci sequence forexFormer PayPal CEO Bill Harris Reveals Why He Thinks Bitcoin Is The Biggest Scam In History - CNBC
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And I think there are a lot of people that know way more about cryptocurrency than we do. And this thing is here to stay for the long run. Yeah, so Anthony Saffer People, even if people are unsure, there are a lot of traditional financial principles that we can apply here.
Alex Okugawa Absolutely, yeah. So using these traditional finance principles can help them better navigate the crypto, how do I invest? How do I allocate wisely? And this one last point here. Or is it here to stay? Leave your comments below and if you have any ideas for future videos, please let us know if you enjoyed this content.
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Tether has become integral to the functioning of global crypto markets. The majority of Bitcoin trades are now conducted in Tether, 70 percent by volume. By comparison, only 8 percent of trade volume is conducted in real dollars, with the remainder being other crypto-to-crypto pairs.
Many industry skeptics, and even proponents, see this as a systemic risk and ticking time bomb. The whole system relies on traders actually being able to exchange tethers for real cash or — far more commonly in practice — other traditional cryptocurrencies that can be sold for cash on banked exchanges like Coinbase or Gemini, both headquartered in the United States.
Should faith in Tether falter, we could see its peg to the dollar collapse in a flash. This would almost certainly cause a liquidity crisis on banked exchanges as well, as investors rush to cash out their crypto anywhere possible amid cratering prices, and banked exchanges processing far less volume would almost certainly not be able to pick up the slack. There is no reason to have any faith in Tether. The company has since continuously revised down claims about how much cash they keep in reserve.
Their latest public attestation on the matter, from March of last year, claimed to be holding only 3 percent of their reserves in cash. Should the market suddenly lose faith in Tether and exchanges become unable or unwilling to exchange them one for one with dollars or the respective amount of cryptocurrency, Tether accepts no obligation to use whatever reserves they may or may not have to buy back tethers.
If that were the case, we would expect the overall supply of Tether to closely track daily crypto trading volumes. Exchanges would only keep enough Tether on hand to cover trading volume and presumably sell off or redeem excess Tethers for cash when fewer people are actively trading crypto.
Instead, the Tether supply has been growing exponentially for years, exploding during crypto market bull runs and continuing straight through years-long downturns. There are now over 78 billion tethers in circulation and rising, about 95 percent of which was issued since the latest cryptocurrency bull market started in early Cryptocurrency is not merely a bad investment or speculative bubble, but something more akin to a decentralized Ponzi scheme. There is no conceivable universe in which cryptocurrency exchanges should need an exponentially expanding supply of stablecoins to facilitate daily trading.
The explosion in stablecoins and the suspicious timing of market buys outlined in the paper suggest — as a class-action lawsuit alleges — that iFinex, the parent company of Tether and Bitfinex, is printing tethers from thin air and using them to buy up Bitcoin and other cryptocurrencies in order to create artificial scarcity and drive prices higher.
Tether has effectively become the central bank of crypto. Like central banks, they ensure liquidity in the market and even engage in quantitative easing — the practice of central banks buying up financial assets in order to stimulate the economy and stabilize financial markets. The difference is that central banks, at least in theory, operate in the public good and try to maintain healthy levels of inflation that encourage capital investment.
By comparison, private companies issuing stablecoins are indiscriminately inflating cryptocurrency prices so that they can be dumped on unsuspecting investors. This renders cryptocurrency not merely a bad investment or speculative bubble but something more akin to a decentralized Ponzi scheme. New investors are being lured in under the pretense that speculation is driving prices when market manipulation is doing the heavy lifting.
But the electricity costs of running and securing blockchains is very real. If cryptocurrency markets cannot keep luring in enough new money to cover the growing costs of mining, the scheme will become unworkable and financially insolvent. No one knows exactly how this would shake out, but we know that investors will never be able to realize the gains they have made on paper. Nowhere near that much has actually been invested into cryptocurrencies, and nowhere near that much will ever come out of them.
Much of that money went to cryptocurrency mining. That money is gone forever, having been converted to carbon and released into the atmosphere — making cryptocurrencies even worse than traditional Ponzi schemes. Much of the money put into cryptocurrency, even if courts could trace back tangled webs of semi-anonymous cryptocurrency transactions, can never be recuperated.
Regulatory Failure Ponzi schemes of this scale typically target other financial firms, banks, elite institutions, and other wealthy investors. Cryptocurrency exchanges with user-friendly interfaces, as well as financial services companies like Square and PayPal, allow retail investors with few assets and little financial literacy to buy cryptocurrency on their smartphones. A recent Pew survey found that one in three adults under thirty have bought or used cryptocurrency.
It is everyday working people who will suffer most when their savings inevitably evaporate overnight. Regulators and policymakers have been slow to protect the public. Ponzi schemes can remain solvent for years while flying under the radar of law enforcement and regulators. Madoff ran his hedge fund as a Ponzi for at least seventeen years. While the Securities and Exchange Commission SEC failed to heed multiple warnings from an industry whistleblower for seven years, regulators acted quickly once Madoff was turned in by his own children.
He was, after all, defrauding the wealthy, bankers, celebrities, and elites. Large Ponzi schemes typically target other financial firms, banks, elite institutions, and other wealthy investors. Tether is built atop and hosted on other public blockchains, predominantly Ethereum and Tron at the moment.
Every time Tether prints another round of stablecoins, now by the hundreds of millions or billions at a time always in suspiciously round numbers , sometimes several times a week, literally anyone can see. There are Twitter bots analyzing cryptocurrency blockchains and posting large or suspicious transfers of new stablecoins that make this as easy as clicking follow.
Tether is cooking the books right out in the open. Skeptics have been pointing this out for years, but regulators and policymakers did virtually nothing until cryptocurrency went mainstream and wildly overvalued cryptocurrency companies began posing a risk to traditional financial markets. Their response is a case of too little too late. In , the Justice Department launched a broad probe into cryptocurrency price manipulation and quickly homed in on Tether. The first cryptocurrency futures ETFs have debuted in recent months, giving traditional investors indirect exposure to cryptocurrency by investing in a range of cryptocurrency companies.
Fidelity Investments also launched a spot cryptocurrency ETF in Canada that would actually hold cryptocurrencies, which would allow investors to make direct investments in cryptocurrency on the same platform where they manage retirement savings; Fidelity is seeking the green light from US regulators to allow Americans the same direct access.
While a few listed companies, most notably Tesla and MicroStrategy, have taken multibillion-dollar gambles on cryptocurrency with company money, most of these companies are simply offering custodial or transactional services rather than investing into cryptocurrencies themselves.
They are operating parasitically, profiting off investments into the crypto Ponzi while rushing toward IPOs before the whole thing collapses. These companies hold precious little cryptocurrency themselves and thus little risk. Policymakers have done little to curb any of this.
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