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How to Distinguish Between Real Crypto Trading Platforms and Crypto Scam Platforms:
As the popularity of cryptocurrencies has surged, so too have the number of trading platforms available to investors.
However, not all crypto trading platforms are legitimate.
The rise of scam platforms poses a significant risk to new and seasoned investors alike.
Understanding how to differentiate between legitimate and fraudulent crypto trading platforms is crucial to safeguarding your investments.
This project explores the key factors to consider when distinguishing real crypto trading platforms from scams.
Examples of current cases:
Our client contacted Specialised Security Services to investigate a possible cryptocurrency investment scam.
In June 2023, our client paid R8,765,502.00 to LYON ASSETS, a company that presented itself as a leader in cryptocurrency trading.
Investigation of the bank account into which our client's money was paid revealed the following:
Account name: FINPRO DESK PTY LTD
Account number: 4107794954
Bank: ABSA BANK
Account Holder: MR CHRISTIAAN JACOBUS LIEBENBERG
The investigation into LYON ASSETS revealed the following:
The website Lyonassets.com was registered on 26 October 2022.
The website was removed several times during the past two years.
On the website, stock photography is used to create a false impression that the company has offices worldwide.
Contact numbers on the website are all VOIP lines diverting to cellular lines registered in Nigeria.
The website server responsible for hosting www.lyonassets.com is registered in Nigeria.
In another case, our client lost R10,000,000.00 in 3 days whilst trading with cryptocurrency on a fraudulent platform.
Cryptocurrency scams are becoming more sophisticated and frequent, and it is crucial for the public to be able to distinguish between legitimate and fraudulent platforms.
To assist the public, we have compiled the following points to consider:
Regulation and licensing:
One of the most critical indicators of a legitimate crypto trading platform is whether it is regulated and licensed by recognised financial authorities.
Legitimate platforms are often registered with regulatory bodies such as the U.S. Securities and Exchange Commission (SEC), the Financial Conduct Authority (FCA) in the U.K., or similar organizations in other jurisdictions.
These platforms must adhere to strict guidelines to protect investors and ensure transparency in their operations.
In contrast, scam platforms often operate without any form of regulation.
They may claim to be regulated but will not provide verifiable registration numbers or details about their regulatory status.
Always verify the platform's regulatory claims through the official website of the claimed regulatory body.
It is a red flag if a platform is not regulated or provides vague information.
Transparency and information availability:
Legitimate crypto trading platforms are transparent about their operations, including fees, trading terms, and the team behind the platform.
They provide clear and detailed information about transaction fees, withdrawal fees, and other costs associated with trading on their platform.
This transparency allows users to understand the costs and risks involved.
On the other hand, scam platforms often lack transparency.
They may hide or provide unclear information about fees or terms, leading to unexpected charges.
Additionally, the teams behind scam platforms are often anonymous or use fake identities, making it difficult for users to verify their credibility.
It is a warning sign if you cannot find verifiable information about the platform's founders, team members, or operational procedures.
Customer reviews and reputation:
The reputation of a crypto trading platform is a strong indicator of its legitimacy.
Real platforms usually have a solid reputation and a large number of genuine user reviews available on various independent websites and forums, such as Trustpilot, Reddit, or Bitcointalk.
Reviews can provide valuable insights into user experiences, customer service quality, withdrawal speeds, and the platform's overall reliability.
On the other hand, scam platforms may have negative reviews highlighting problems such as withdrawal issues, poor customer support, or unfair trading practices.
They may also have overly positive reviews that sound unnatural or are clearly fake.
Be wary of platforms with too many "too good to be true" reviews, as these may be paid or fabricated.
Security measures:
Security is paramount in crypto trading.
Legitimate platforms use advanced security measures, including two-factor authentication (2FA), encryption, cold storage for funds, and regular security audits to protect user funds and data.
They also provide clear guidelines for securing their accounts and avoiding phishing attacks.
In contrast, scam platforms often lack robust security measures or provide vague information about how they protect user funds. They might not offer 2FA or other basic security features.
A lack of emphasis on security strongly indicates that a platform may not be legitimate.
Deposit and withdrawal processes:
A legitimate crypto trading platform will have straightforward, transparent deposit and withdrawal processes.
They will not charge exorbitant withdrawal fees, and users will be able to withdraw their funds within a reasonable time frame.
Moreover, real platforms typically do not require users to pay additional fees or provide more funds to unlock withdrawals.
Scam platforms, however, often use tactics such as "withdrawal fees" or "unlock fees" to extract more money from users.
They might promise high returns and then demand additional payments before allowing withdrawals, a classic hallmark of an advance fee scam.
Unrealistic promises and guarantees:
Legitimate crypto trading platforms do not guarantee profits.
Cryptocurrency trading is inherently risky due to the market's volatility.
No platform can accurately predict market movements or guarantee returns. Reputable platforms provide disclaimers about the risks involved in trading cryptocurrencies.
Scam platforms, however, often promise guaranteed returns or high profits with minimal risk.
They may use high-pressure sales tactics to lure in inexperienced investors by promising to double or triple their investments quickly.
Such guarantees are a major red flag and should be avoided at all costs.
Communication and support:
Legitimate platforms offer multiple communication channels, including customer support via email, phone, or live chat.
They respond to queries in a timely manner and provide clear, helpful answers.
Scam platforms often have poor customer support or lack proper communication channels.
They may take a long time to respond or provide evasive answers.
If you encounter difficulties reaching out to a platform's customer support or find that they are unresponsive, it is a potential sign of a scam.
Distinguishing between genuine and scam crypto trading platforms requires vigilance and due diligence. Investors can protect themselves from scams by focusing on factors such as regulation, transparency, customer reviews, security measures, deposit and withdrawal processes, promises and guarantees, and communication channels.
Always conduct thorough research, verify the platform's legitimacy, and remain cautious of offers that seem too good to be true.
If something sounds too good to be true, it usually is.
Notice to the public:
There is no such thing as a "get rich quick" scheme.
Always exercise extreme caution when investing and consult SSS's Cyber Team to conduct a thorough forensic analysis of any platform you are considering.
The safest investment option is through a trusted banking platform. For example, using Easy Equities via the Discovery Banking App.
Warning to the public:
Be wary when engaging in significant transactions online.
Do a thorough identification, evaluation, and risk analysis before conducting business online.
It is economically wiser to request a proactive investigation into a platform before investing, as opposed to conducting a reactive investigation after the fact.
Do not engage in an investment simply because a well-known public figure suggests that it is safe to do so.
Identity theft of public figures is often used to mislead the public.
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Mike Bolhuis
Specialist Investigators into
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