Investment Scams
Investment scams involve a bad actor enticing people to send their cryptocurrency to the fraudster with promises of “huge gains.”
Scammers can play many parts, such as an “investment manager,” a celebrity or even a love interest on an online dating site. 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. A fraudster entices you to buy an obscure crypto at a “low price,” with promises that the asset’s value will soon go through the roof.
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.
“Typically, the new token is worth a few cents, or even fractions of a cent. But a little bit of momentum can drive it up the charts on sites like CoinMarketCap.com to make it look like the sky’s the limit on price appreciation,” Cummings says.
“Given the speed at which new coins are created and marketed to investors on the internet without regulation, some investors looking to earn a quick profit are drawn in by reports of triple-digit percentage gains in a digital asset over a short period of time and want to jump on the bandwagon,” he says.
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. These are known as socially-engineered scams.
Measures to Help Avoid ‘Get Rich Quick’ Scams:
Do your own research using trustworthy sources before deciding to invest your money
If an investment appears to be too good to be true, it probably is
Make sure the website you are visiting is legitimate, and the URL is not manipulated in a way to look like the legitimate one
So with the above context in mind, we are here to help you recover your lost funds from the banks and credit card providers with our extensive knowledge in fraud detection and years of experience in dealing with these matters. We have a high success rate and many satisfied customers. Below we list several common Forex scams that have gained traction over the last decade as the internet has reached a larger population.
High yield investment programs
High Yield Investment Programs (HYIP) are (a lot of the time) a form of Ponzi scheme in which a high level of return is promised for a small initial investment into a forex fund. However, in reality, the initial investors are only being paid back by the money generated by the current investors and once there are no more investors in the scheme the owners usually close it down and take all money remaining.
Ponzi or pyramid schemes
This is a very common form of affinity fraud. They promise high returns from a small initial investment upfront. The early investors usually do gain some sort of return on their money and motivated by this success they then recruit their friends and family into the scheme. However, the truth is that the ‘investment opportunity’ does not actually exist and their initial return is being funded by money paid in by other members of the scheme. When the investor numbers start to drop the scammers close the scheme and take the money. We have covered this type of scam in-depth under the Ponzi & Pyramid scams section.
Point-Spread Scam
This old forex scam was based on computer manipulation of bid/ask spreads. The point spread between the bid and ask basically reflects the commission of a back-and-forth transaction processed through a broker. These spreads typically differ between currency pairs. The scam occurs when those point spreads differ widely among brokers. Brokers often do not offer the normal two- to three-point spread in the EUR/USD, for example, but spreads of seven pips or more. (A pip is the smallest price move that a given exchange rate makes based on market convention. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point.) Factor four or more pips on every $1 million trade, and any potential gains resulting from a good investment are eaten away by commissions.
“Robot” Scamming in Today’s Market
A persistent scam, old and new, presents itself in some types of forex-developed trading systems. These scammers tout their system’s ability to generate automatic trades that, even while you sleep, earn vast wealth. Today, the new terminology is “robot,” because of the ability to work automatically. Either way, many of these systems have not been submitted for formal review and tested by an independent source.
Signal-Seller Scam
A popular modern-day scam is the signal seller. Signal sellers are retail firms, pooled asset managers, managed account companies or individual traders that offer a system – for a daily, weekly or monthly fee – that claims to identify favorable times to buy or sell a currency pair, based on professional recommendations that will make anyone wealthy. They tout their long experience and trading abilities, plus testimonials from people who vouch for how great a trader and friend the person is, and the vast wealth that this person has earned for them.