What Is Bitcoin Forex Trading Fraud?
A bitcoin forex trading fraud can refer to several scenarios:
- A scam broker that offers both bitcoin and forex
- A fraudulent forex broker that will accept only bitcoin or cryptocurrencies as a payment method
Many bitcoin forex trading scams fit both categories. In the first scenario, the broker may claim to offer bitcoin and forex trading. They encourage clients to trade either one or both. These fake brokers may concentrate on highly risky trading products like bitcoin or forex as a way of explaining away losses.
Also, if the clients realize there is a risk of losing money anyway, it may follow logically that they may be less likely to complain if they feel they were scammed out of their money than a more conservative investor.
The fact is, in many cases, no actual trading happens. Many of these bitcoin forex trading frauds are Ponzi schemes in which money comes in and those few people who are allowed to withdraw funds, usually with huge fees, are paid not by returns on trades but through the money the broker gets from new clients.
When many people try to withdraw money at once and the fake broker can no longer justify payment delays, they will usually disappear without a trace and with clients’ money.
Regarding the second category, many forex trading scams will accept bitcoin and cryptocurrencies as the only means of funding an account. They do this to avoid credit card chargebacks, wire recalls and other methods customers have of reversing charges and getting their money back. Since no transactions on the blockchains are refunded and since they are anonymous, it can be easier to get away with their fraud.
Signs of Bitcoin Forex Trading Scams
The following are warning signs of bitcoin forex trading scams:
- Unlicensed brokers
- Guaranteed returns
- Aggressive tactics
- Do not accept credit cards as a payment method
- Extremely high fees
- Denies requests to withdraw money
- Does not communicate regularly
The first thing to look for in a broker is a reliable and current license. Most bitcoin forex trading scams are not licensed or have a third-rate license. Licensing is important because regulators provide oversight, take disciplinary measures against certain brokers, and act upon customer complaints. Watch out for fake licenses and confirm licensing by looking up the broker on the regulator’s website.
No broker can guarantee returns on trades, especially with risky trading vehicles, such as bitcoin and cryptocurrencies. Any broker that claims to guarantee returns is not trustworthy. Brokers that accept only cryptocurrencies as payment and do not take credit cards are doing this because they want to avoid credit card chargebacks and having money to clients automatically refunded.
Although most brokers have fees, requiring high fees for withdrawing money or being reluctant to release funds is a sign of a bitcoin forex scam. Look carefully at the terms and conditions before signing up with a broker and read reviews online. Although not all reviews are authentic, taking time and doing research should provide a fuller picture of a broker and help you avoid bitcoin forex scams.
If your broker is not communicating with you and will not allow you to withdraw money without an exorbitant fee, it is essential to contact a fund recovery agency right away. There is little chance for an individual client to get money back from a fraudulent broker without advocacy from a fund recovery service.
