The New Rash Of Investor Rip-Offs… And How To Avoid Them

Plenty of modern-day investment rip-offs now use Bitcoin and cryptocurrencies as underlying instruments. And inevitably, investors spurred on by stories of early adopters turning $100 worth of Bitcoin into over $137,000 in only a few years are hopeful to cash in on the next potential home-run offering.

Enter initial coin offerings (ICOs), which supposedly bring to market new cryptocurrencies, much like an IPO does with company stock. ICOs, however, are highly speculative at best, and can turn out to be outright scams. Cryptocurrencies themselves, afterall, are not regulated nor secured by an underlying asset or agency, and the ease with which scammers may falsely hype and then sell bogus currencies over the Internet makes this space a hotbed for fraudulent activity and investor rip-offs.

Meanwhile, cryptocurrency contracts for difference, or CFDs, are complex, high-risk, and highly leveraged vehicles that speculate on upcoming price changes in cryptocurrencies like Bitcoin, Ethereum, and others. Perhaps a bit comparable in construction to leveraged, or ultra ETFs—minus the underlying asset, of course—the purchase or sale of CFDs is illegal in the United States, and (probably) for good reason: CFDs are simply not suitable for investment purposes.

How to Spot (and Avoid) Investor Rip-Offs

  • Become knowledgeable about cryptocurrencies, and the risks and opportunities for investors
  • Do not take part in ICOs or invest in cryptocurrency CFDs

Affinity Fraud

While not descriptive of a particular investment, affinity fraud is instead a popular means by which Ponzi, pyramid, or other scammers locate possible victims. By targeting members of identifiable groups—like community organizations, ethnic or religious groups, athletes, the elderly, or various professional groups—fraudsters exploit the friendship, trust, and shared interests and values that tend to permeate these segments to gain continuous access to unsuspecting victims. Many even insert themselves as members of the affinity group, or enlist leading members to help push the validity of their offerings, in the process exploiting and likely stealing from them as well.

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Disclosure: I understand that Online Trading Academy instruction will prepare me to actively trade securities and/or other financial instruments for my own account at an appropriate financial firm ...

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TheExitFirm 2 years ago Member's comment

As the saying goes, when a person with money meets a person with experience, the one with money walks away with experience and the ones with experience walks away with the money. The rip-off merchants take this to a new level.

Emma Davidson 2 years ago Member's comment

Lol, I hadn't actually heard that one before.