Cryptocurrencies have become a real phenomenon in recent years, attracting millions of investors around the world. However, their popularity and relative novelty have made cryptocurrency exchanges an attractive target for scammers. In this piece, we’ll break down the main schemes to cheat on crypto exchanges and tell you how to protect your funds.
Fake exchanges
One of the most common schemes of deception is associated with the creation of fake platforms for trading cryptocurrency. Such sites visually look like real exchanges: they may have an elaborate interface, fake reviews and even their own mobile application. Scammers offer to register, make a deposit and start trading.
However, as soon as the user transfers money to the platform, problems begin: either the funds simply disappear, or the withdrawal becomes impossible. Sometimes the site suddenly “closes”, and the owners remain inaccessible.
To avoid such situations, it is important to use only well-known and proven platforms. Check reviews about the exchange on independent forums, pay attention to the presence of licenses and the time of operation of the company.
Phishing attacks
Fraudsters often create copies of popular exchanges with minor differences in the domain name (for example, “binnance.com” is used instead of “binance.com”). Users are lured to such sites through fake advertisements or fake emails.
Once logged into the phishing platform, logins and passwords fall into the hands of the attackers. This allows them to access users’ real accounts and steal their funds.
To avoid becoming a victim of phishing, always check the website address before entering personal data. Use bookmarks to enter exchanges, enable two-factor authentication and ignore suspicious emails.
Manipulations with rates
Some unscrupulous exchanges manipulate the prices of certain cryptocurrencies. This can be done by “tweaking” trading volumes or artificially increasing/decreasing the rate.
For example, an exchange may show that a certain coin has sharply increased in price to attract buyers. In fact, the price will be artificially high, and after the mass purchase, the rate will instantly fall, leaving traders at a loss.
To avoid falling victim to such schemes, use exchanges with a good reputation and compare prices on several platforms.
Freezing funds under the pretext of “verification”
Some fraudulent exchanges block withdrawals under the pretext of “suspicious activity” or “identity verification requirements”. The user is asked to provide additional documents, pay commissions or fulfill other requirements.
In fact, this is a way to delay time and make the client spend more money. Once all the conditions are met, the exchange may simply stop responding to requests.
To avoid this, choose platforms with transparent withdrawal conditions. Read reviews of other users and do not trust platforms that require payment of additional fees for unlocking the account.
Hacker attacks
Even large exchanges are not immune to hacker attacks. Fraudsters find vulnerabilities in security systems and steal users’ funds. For example, in 2014, the Mt.Gox exchange lost more than 850 thousand bitcoins as a result of such an attack.
To minimize risks, never keep all your funds on an exchange. Transfer cryptocurrency to personal wallets, especially if you don’t plan to actively trade. Use cold wallets for long-term storage.
Traps on new exchanges
Scammers actively take advantage of the interest in new exchanges, offering unique conditions: minimum commissions, bonuses for registration, special promotions. Such platforms can work honestly at first to gain trust, and then disappear with users’ money.
Before you start working with a new exchange, carefully study its reputation. Find out who is behind the project, whether the company has licenses and how long it has been operating.
Fake technical failures
Some exchanges intentionally create technical glitches to limit users’ access to accounts at key moments. For example, when the price of a popular cryptocurrency rises or falls sharply, the platform becomes “unavailable.”
This allows fraudsters to manipulate users’ funds and capitalize on them. Such cases are difficult to prove, but they happen quite often.
To reduce risks, do not keep large sums on one platform and plan ahead in case of unstable operation of the exchange.
How to protect yourself?
- Use only trusted exchanges. Choose platforms with a long history and good reputation.
- Enable two-factor authentication. This will make it more difficult to access your account.
- Do not keep all your funds on the exchange. Regularly transfer cryptocurrency to personal wallets.
- Be attentive to emails and links. Do not follow dubious links and do not enter data on unfamiliar sites.
- Watch out for reviews. Read the opinions of real users and avoid platforms with a suspicious reputation.
Cryptocurrency exchanges can be a convenient tool for trading and investing, but it’s important to keep in mind the risks involved. Carefully checking the platform and following precautions will help protect your funds and avoid unpleasant situations.