How To Beat The Crypto Scammers

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.

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