Scared of Crypto? This is how you can spot fake crypto exchanges

The growing popularity of cryptocurrencies has led to an increase in the number of cryptocurrency investors, as well as genuine and fake cryptocurrency exchanges.

A cryptocurrency exchange is a market where cryptocurrencies can be bought and sold. Crypto exchanges provide storage for crypto as well as trading services and price discovery through trading activity.

By the way, cyber security firm CloudSEK revealed in a recent study how Indian investors have been cheated out of over Rs 1,000 crore by a fake crypto exchange scam. However, this is not the only case, as according to data shared by Chainalysis, a Singapore-based Blockchain data platform, a record $14 billion was stolen by crypto fraudsters in 2021.

Amidst all this, crypto industry insiders have now suggested ways investors can spot such fake trades.

How to detect such exchange and stay safe?

According to crypto industry insiders, one of the easiest ways to identify and perform basic due diligence is to check the details of the registered company, including its founders information, media coverage, and customer reviews.

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Verifying registered crypto exchange data is the simplest approach to discovering and carrying out basic due diligence.

“Companies that are registered outside of India should not be trusted with digital assets because it is difficult to do due diligence and there is no legal recourse when fraud is found,” says Mark Tighe, founder of Catax, an audit and auditing system. crypto taxes. and commissioning forensics.

Tighe said that Bitex and Franc Exchange, which are copies of well-known exchanges like BitMEX and Binance, came into being to mislead customers under the guise of crypto services.

Crypto industry insiders have also said that if any crypto platform is giving very high returns, that is the first red flag.

“Dodgy and nondescript crypto platforms offer ‘too good to be true’ returns on digital assets. If you see a platform offering very high returns, that is the first red flag. Given the uncertainty and turmoil in the crypto markets, it is not feasible to generate high returns from cryptocurrencies,” says Sharat Chandra, VP of Research and Analytics at EarthID, a Blockchain-based company.

Mantras to Stay Wary of Fake Cryptocurrency Exchange

Experts have also suggested ways and means to stay wary of fake crypto exchanges.

“If an exchange promises a rate of return on an investment that seems too good to be true, it most likely isn’t. Any offer of guaranteed returns should also be considered suspicious. Since the cryptocurrency market is very volatile, you never know how much you will win or lose. I would say that potential investors should only use trusted exchanges if they want to invest in cryptocurrencies,” says Dr. Oriol Caudevilla, director of the board of the Global Impact FinTech Forum (GIFT) and FinTech Advisor.

Sandeep Shukla, Professor of Computer Science and Engineering at IIT-Kanpur and co-director of the National Blockchain Project, advises that investors should never choose an exchange based on social media ads or direct messages.

“Always do your research and more often than not you will find a real exchange that they are faking,” he says.

“Also the behavior of the cryptocurrency exchange, in terms of how they advertise, how they attract customers, the nature of the advertisements they post on social media or via email are important and should be reported,” it adds.

Fake crypto exchange

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More than 900 investors were reportedly scammed out of Rs 1,200 crore in March 2022 by a website advertising a fake cryptocurrency called Morris Coin.

In March 2022, more than 900 investors were allegedly cheated out of Rs 1,200 crore by a website offering a fake cryptocurrency called Morris Coin. This coin was listed as crypto exchange Francs, a fake crypto exchange by some industry insiders.

Morris Coin was launched by K Nishad, a resident of Malapuram, Kerala in 2020 through the initial coin offering (ICO) of ‘Morris Coin’, a new cryptocurrency token as the main promoter of cryptocurrency.

According to reports, 900 people contributed to the ICO. Investors were required to hold the tokens in cryptocurrency wallets provided by the promoters for 300 days after purchasing 10 Morris Coins for Rs 15,000. At that time, the token was expected to be listed on the franc exchange, a cryptocurrency exchange with headquartered in Coimbatore. Token advocates guaranteed that its value would increase many times after being listed, but this all turned into a huge scam.

Nishad was later booked and arrested by the Enforcement Directorate for the Morris Coin scam.

Delhi Police DCP (Cyber ​​Cell) KPS Malhotra told Outlook Money that there are several platforms pretending to be crypto exchanges and circulating links on WhatsApp/Telegram groups through which some investors trade, thus opening the door to fraud

According to him, investors should make payments only through major exchange websites, rather than through links.

Chandra adds: “These platforms do not have any due diligence or framework for listing tokens and often come with an anti-dumping clause for tokens. Investors should examine the credentials of the project owners, the developer team, and the community before investing in any crypto token.”

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