Fake crypto exchanges are sprouting up like mushrooms these days because, thanks to the current crypto boom, this is a lucrative business for scammers. So that you do not fall for a fake crypto exchange yourself, we will show you which fraud schemes scammers prefer to use and how you can distinguish a fake platform from a legitimate one.
Fake crypto exchanges are crypto trading platforms that make users believe they can trade cryptocurrencies there. Just like with legitimate platforms, users can invest money in coins or NFTs on fake crypto exchanges. The difference from a legitimate platform: Users do not actually acquire any assets. The fake platform only makes them believe that they do.
When users want to withdraw their money from the platform, this is not possible. At the latest, they realize that the platform is a scam. In most cases, the money is gone because the operators of such fake crypto exchanges are usually based in countries with insufficient legal frameworks and have erased their tracks so well that it is almost impossible to track them down.
Fake crypto exchanges use different tactics for their scams. However, they all have in common that they promise users high profits in advance that they could not achieve on other (legitimate) platforms or allow them to trade crypto under particularly favorable and exclusive conditions.
The most popular scam variant that fake crypto exchange providers use is exit scams. Here, the operators first “collect” as many investors as possible and convince them to invest money in crypto assets on the platform. They advertise on social media or in crypto online communities.
Often, it is even possible at first for investors to withdraw small amounts again on the fake platform, so it does not immediately appear that this is a fraudulent platform.
Once the operators have won enough users who have deposited money, they shut down the platform without notice. They no longer respond to inquiries, the website is no longer accessible, and users can no longer withdraw any money. The scammers have disappeared with all the users’ money.
Another scam variant is price manipulation. In this case, fake crypto exchanges change the trading prices of cryptocurrencies and NFTs. For users, it then appears as if they can buy crypto assets at an especially favorable price or sell them at a higher value than the current market price. These platforms often also advertise particularly low order fees to attract even more users.
However, as soon as users buy an asset, for example, invest in Bitcoin, the platform gives them a worse exchange rate. If these price manipulations are only minor, such a platform can operate for a very long time without users noticing that they are getting worse conditions than on a legitimate platform.
Some fake crypto exchanges use bots to make users believe there is a high trading volume on the platform. This is meant to show users that it is a trustworthy platform because, at first glance, many investors seem to be trading there.
This strategy is particularly often used in combination with exit scams. The high trading volume generated by bots on the platform is intended to build trust and credibility and attract as many users as possible to the platform. If users invest money in assets there, the fake crypto exchange providers pull the plug after some time and disappear forever with the money.
Through phishing emails or chat messages, users are directed to a fake website that looks deceptively similar to a legitimate crypto platform. The message asks users to enter their login credentials or private keys on the fake website.
Scammers often put users under pressure by scaring them. For example, they claim that there has been a hacker attack and that the user must quickly change their login credentials. In their panic, users overlook the fact that clicking the link in the email takes them to a fake website.
Scammers often put users under pressure by scaring them. For example, they claim that there has been a hacker attack and that the user must quickly change their login credentials. In their panic, users overlook the fact that clicking the link in the email takes them to a fake website.If users enter their data on the fake website, the scammers obtain the login credentials and can plunder the user's account on the real, legitimate crypto platform.
Another popular method of scamming users out of their money is fake initial coin offerings. In this case, fake crypto exchanges promote an allegedly new cryptocurrency that is not available anywhere else. They usually promise investors very high profits and put them under time pressure, saying: “Invest now before the hype breaks out and the coin really booms!”
Users who invest in these coins will soon be disappointed: Either the coins do not exist at all, or the coins are completely worthless. In both cases, however, the invested money is gone.
If a platform promises you very high profits or makes you offers that do not exist on legitimate platforms because they are simply too good to be true, then it is most likely a scam.
Fake cryptocurrency providers thrive on luring as many users as possible into their trap with high profit promises. If an offer is too good to be true, then stay away.
When you register on a crypto trading platform, first invest only a small amount of money. Then withdraw this amount again to see if the withdrawal process works smoothly.
If it takes a very long time for the platform to pay out even a small amount, this is a very big red flag. The same applies if the withdrawal process is very complicated, for example, if you have to identify or verify yourself again every time.
If it takes a very long time for the platform to pay out even a small amount, this is a very big red flag. The same applies if the withdrawal process is very complicated, for example, if you have to identify or verify yourself again every time.If you contact customer support because you want to make a withdrawal and there are problems, but you do not receive any help, then this is also an unserious platform. If you have only invested a small test amount there, it is annoying if you do not get the money back, but at least it is not a huge loss.
Legitimate crypto platforms are regulated by financial authorities. With fake crypto exchanges, this is not the case. To increase their credibility, fake platforms often state on their website that they are regulated by certain authorities.
You should research whether this is true. Online forums or review sites can also help you find out more about the platform and read what other users say about it. This will help you better assess whether the platform is legitimate or not.
Fake crypto exchanges are often very well disguised, and many users only realize the scam when it is already too late. The best advice we can give you is to stay vigilant. If you come across a crypto platform, first find out as much as possible about it.
In any case, test the withdrawal function first with a small amount. If even that does not work or is very complicated, then you immediately know that it is better to stay away from this platform.
You should also be suspicious of high profit promises. Why would a small, unknown platform be able to offer you a better deal than a large, legitimate platform? Do not be blinded by high profit promises because they are certainly fakes.
If you have fallen for a fake crypto exchange, you can contact us. At CountWize, we help you understand how to proceed to get your crypto assets back and what options you have.
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