How To Recognize Dubious Trading Platforms For Cryptocurrencies
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Bitcoin has made cryptocurrencies popular with many investors despite the high risks. These affect not only the performance but also the trading venues. There are a lot of things that can go wrong when choosing the right platform. We will discuss some right ways to do it.
- Cryptocurrencies like Bitcoin today price have been in fashion for quite some time – even apart from the hype that the pandemic brought them. And while large investors are also flirting with the topic, private investors are faced with the question of the right trading venue. But the selection of trading platforms should be well thought out because not all are reputable.
- The crypto exchange Africrypt in South Africa turned out to be a scam last year: In June, the founders disappeared and with them around 70,000 bitcoins that customers had purchased and stored on the trading platform. The stolen digital coins were worth around $3.6 billion.
Sudden Disappearance Of Money
Financial authorities have repeatedly investigated platforms on which real money can be exchanged for digital coins. The platforms usually keep the digital currencies purchased from them – if the provider disappears, the money is gone just as if a bank director had cleared out his safe.
That doesn’t just happen to customers in distant countries: there are plenty of platforms that advertise with German celebrities such as Günther Jauch or Dieter Bohlen. A further complication with these dubious providers is that their advertising on the Internet is often placed with the logos of well-known media such as RTL or “Der Spiegel”. It is often difficult for consumers to recognize that these overlays are fake.
Reputable Providers
Various online news providers and analysts have warned about some of the online trading platforms that are not safe for trading. There are some very reputable and trustworthy wallets and trading platforms online. According to a German-based news agency Stiftung Warentest in a recently published list of brokers and trading venues, there are some platforms that are considered serious according to the experts. These include Finanzen.net Zero, Justtrade, Scalable Capital, and the Trade Republic. According to Stiftung Warentest, the German financial supervisory authority (BaFin) has been warning of the trading platforms Cakedefi.com, Unionmarkets.com, Igcmarkets.com, and Globchains.com since last year.
- In general, the financial supervisory authority Bafin – like the Federal Criminal Police Office – advises “to be extremely careful with investments on the Internet and to research them thoroughly in advance to identify attempts at fraud in good time”. Recently, consumer advocates had also warned against attempts to initiate crypto transactions via Whatsapp. That was anything but the pinnacle of trustworthiness, explained Thomas Mai, financial expert at the consumer advice centre in Bremen.
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The Scams
In addition, the financial supervisory authority reports other tricks used by fraudsters: In December, Bafin warned of calls from an alleged “Toni Wella” from the company “Coinbase”. The callers are therefore offered help to recover lost funds from financial market transactions. The fact that “Toni Wella” works with the Bafin was fictitious.
“Consumers should generally be extremely vigilant when third parties act under the name of Bafin,” warned the financial regulator. This also applies to emails that consumers have received from alleged Bafin employees, in which they are asked to make various financial transactions and to pay an amount to “unlock the money”. An attempted fraud, according to financial regulators.
Fake Wallets
Those who do not keep their cryptocurrencies on a trading platform but rely on their digital wallet are not necessarily on the safe side. Market analyst Florian Eberhard from brokerage house GKFX says about the security of the so-called wallets: “In the case of a direct investment via a crypto exchange, the customer himself is responsible for securing his holdings. If, for example, the storage medium or the password is lost, the money is gone.”
It is very easier to be a victim of hacking attacks. There is also another danger: The majority of Bitcoin assets are spread over a few thousand wallets. The owners are unknown. That leaves room for market manipulation.
