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Popular scams and what to look out for


Scams are everywhere and most recently the SA Financial Sector Conduct Authority warned of another potential cryptocurrency scam, called “Karatbars”.  It's important to point out that scams are not at all unique to crypto. Whenever money is involved unscrupulous individuals seem to crawl out of the woodwork. As crypto is fast, often anonymous (pseudo anonymous in Bitcoin’s case) and irreversible, you need to be vigilant.

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Ponzi schemes are rampant in South Africa. These are schemes where early investors get paid with the investments of new investors. When new investors stop investing the scheme collapses as there is no new money to keep it going. You never see your invested money again. One reason crypto is used in ponzis is because many people don't understand crypto and it's an easy excuse to explain away illogical returns. “Want to double your money in a week? Crypto”. 

So how might you identify a ponzi? Behaviour to look out for includes:

When people approach you promising extremely high returns. They put pressure on you that time is running out and that you must invest right now. They give you guarantees that you will make money or that you can't lose. When you do a simple google search you cannot find any information or verify any of the claims by the people/company/scheme they are pushing. They use social media to push links with large signup/referral bonuses or prizes. When you ask them how the scheme or company makes money they don't tell you.

Social media is an amazing tool, scammers love it too. Impersonating scams are rampant. Scammers impersonate your favourite celebrity. Don't trust offers that come from Twitter, Facebook or Instagram. Fake accounts are everywhere.

If someone on these platforms asks for even a small amount of your money, it's likely you will never get it back. Just because others are replying to the offer, don't assume they are real either, many times they are bots. Even if they don't ask for money, they engage with you and get other valuable info. They trick you into taking action or supplying information about yourself. For example, supplying a name, address, email and phone number in order for you to claim a prize. Beware, this can allow scammers to attempt to use the information to gain access to your accounts by impersonating you.

Bitcoin mining payout schemes is another type of scam used, they are prolific in the crypto community. Sometimes in conjunction with Ponzis, or they just cut and run with your money from day one. Bitcoin mining is an expensive and complicated process and to achieve economies of scale, most projects pool their mining resources and share the revenue. Some are legitimate, but most aren't - mostly the incredible return they promise is the big red flag. Best for the novice investor to avoid.

The above is by no means complete, you can check out more types of scams here.

Moral of the story, only deal with reputable, trustworthy, registered companies and people.



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Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by Earle Loxton, CEO of DCX Capital (Pty) Ltd as general market commentary, and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.