How To Beat The Crypto Scammers

It’s the 800-pound crypto gorilla in the room: crypto scams exist. That’s the main reason Facebook just banned all crypto ads, including ones that promote bitcoin and ICOs.

You’ve just found it — a promising cryptocurrency startup that few have heard of. It claims to be developing a blockchain system for agricultural commodities, such as fruits and vegetables.

Its goal: to raise $6.5 million.

It’s exciting to be part of the beginning phase of a company — particularly a crypto company. You decide to invest a little. When the startup, called Prodeum, tries to sell its tokens to you through a fundraising technique called an ICO — or initial coin offering — you say: “Sure, why not?” You hand over a few hundred dollars.

Then the company suddenly vanishes.

Luckily, you didn’t hand over your life savings. Phew. But you’re wary of the crypto industry now. Not just you, but the entire market.

And with good reason. Crypto scams like these are real. In fact, this Prodeum scam was just uncovered this past weekend.

So when scam rumors circle or regulatory crackdowns take place, it understandably adds more volatility to an already volatile market.

But as I’ve mentioned before, cryptos are here to stay. Period. The trick — as I’ll tell you today — is figuring out which are the fool’s-gold crypto scams and which are the opportunities that will help you hit pay dirt, and how to take advantage of the latter when volatility hits…

Cracking Down on Crypto Scams

It’s the 800-pound crypto gorilla in the room: crypto scams exist.

That’s the main reason Facebook just banned all crypto ads, including ones that promote bitcoin and ICOs. Truth be told, if you have to advertise your new crypto investment offering on social media, it’s probably not worth buying anyway. But I digress.

South Korea also cracked down on crypto scams recently, and the country has uncovered $600 million in crypto-related crime. Some crypto skeptics were worried South Korea would shut down trading on exchanges, but it only introduced new regulations.

And in December, the U.S. Commodity Futures Trading Commission sent subpoenas to crypto exchanges Bitfinex and Tether, the latter being a controversial project that claims to peg a cryptocurrency to the U.S. dollar.

Notably, the two projects share the same chief executive officer.

BitConnect also raised concerns. A second lawsuit was just filed against the cryptocurrency exchange after it shut down. The suits claim it’s a Ponzi scheme. Now a temporary restraining order on its assets has been granted to help plaintiffs recover their funds.

After this onslaught of news, bitcoin prices understandably retreated 12% on Thursday, falling below $9,000 for the first time since November.

But, as it always happens, it will bounce back. For those who buy during these dips, who have a plan and don’t let the scams shake your outlook of the crypto market … you’re well-positioned to profit while others miss out.

So What Exactly Is a Crypto Scam?

It’s easy to say: “Be wary of scams.” But what exactly do you look for?

Well, I can give you an example of one crypto asset that’s raising some red flags.

As I mentioned before, Tether is a “stablecoin” — a cryptocurrency intended to represent the U.S. dollar. It allows crypto traders to move in and out of virtual currency without having to cash out of the exchange and into a bank account.

For instance, an investor who owns bitcoin on the Bitfinex exchange and wants to get out can trade it for tethers. Sounds great, right?

Many people agree. Currently, there are 2.2 billion tethers in circulation.

Each tether represents $1, so there should be a reserve of $2.2 billion in a bank somewhere should holders wish to redeem their tethers for dollars.

Here’s where things get dicey…

For the past few months, there have been growing concerns that the group behind Tether has been printing the virtual currency without keeping an equivalent reserve in a bank account.

According to Tether’s website, the last audit was on September 15, and it showed a reserve of $443 million versus 420 million tether tokens.

However, we know the amount of tethers on crypto exchanges has ballooned to 2.2 billion since then. There’s a lot to be accounted for here.

What’s more concerning is the accounting firm that conducted that audit recently. It just cut ties with Tether. (This is never a good sign. It indicates the firm could have uncovered something it doesn’t like.)

If the tether isn’t pegged to a matching number of dollars, the company would be able to print ceaseless amounts of tokens, making them become essentially worthless.

We’ll continue to hear more about tether as the Commodity Futures Trading Commission investigates it. But this is one crypto asset to be wary of.

Watch Out for Crypto Scammers

Ultimately, it comes down to doing your research and relying on trusted sources, exchanges and experts.

For example, Coinbase, Kraken, Bittrex, and Cryptopia are somewhat trusted exchanges.

Be cautious when considering involving yourself with an ICO. These are where the “pump and dump” schemes can happen. Of course, there are promising ICOs out there, but to find them, you have to keep your ear to the ground. I’ll continue to keep you updated on them here.

I know there’s a lot of information out there, and it can be difficult to sift through it all.

That’s why I’m excited to work with Banyan Hill on an upcoming crypto service. There continues to be huge gains to be made in this market if you follow a disciplined, mindful plan. And that’s exactly what I use in my crypto trading system.

In fact, I already have a great trade on my radar, so be on the lookout for more news on this.

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