How to Spot a Fake Cryptocurrency Exchange

What is a Scam Crypto Exchange?

A scam cryptocurrency exchange is a fraudulent trading platform designed to steal users’ information, funds, or both. These criminal entities usually spring up from nowhere and create significant buzz by promising users heaven and millions of galaxies.

After establishing some online presence, these fake exchanges create numerous promotions and promise bonuses and profits to onboard people. Their aim is to get as many people onboard within the shortest possible time. These platforms may even offer legitimate services and keep their pledges to appear legitimate.

The fake crypto payment platform will suddenly start having “minor” issues like delayed withdrawals due to network congestion. These little hiccups soon become pronounced and can no longer be hidden.

When the issues become full-blown, the people behind the scam go completely quiet or disappear. It almost becomes as though the exchange never existed. Before people can process what just happened, their funds are lost. Worse still, they also provided sensitive information that could be exploited in the future.

How to Spot a Fake Cryptocurrency Exchange

Individuals who run fake crypto exchange scams are very smart and will always play the long game. They usually cover their tracks as much as possible when starting out to avoid suspicion. Nonetheless, there are certain cracks that users can see through to avoid falling victim.

Here are signs to spot a fake cryptocurrency exchange:

• Unrealistic Profit Offerings: This is their go-to strategy to onboard significant users in record time. These fake exchanges promise high staking rewards or other promotional benefits. You should be careful of any exchange that promises returns of more than 10%.
• False Trading Volume: After launching the fake crypto exchange, these scammers like to project a false image of user activity on their platform. As a result, they lie about the trading volume and claim to rack up millions in trading volume. Meanwhile, they only have about 50 cryptocurrencies.
• Opaque Operations: To enable them to get away with their scam, these fraudsters reveal as little information about themselves as possible. In this regard, they will hardly have proper team members to oversee their operations. Even when they do, these individuals will either be nameless or faceless.
• No Recognized Licensing: Every company must have a domiciliary, indicating where the headquarters is situated. Cryptocurrency exchanges are also businesses and must have the right business license to operate within the legal framework of where they are located. If the exchange lacks the right license, there is a high chance it is fake
• Near-Nonexistent Security Measures: Fake cryptocurrency exchanges will not invest in security measures, as it counteracts their aim. One of their exit strategies is to get “hacked” and never recover. Having poor or no safety architectures in place makes cybersecurity breaches easy and the story believable.

What To Do If You Already Have Funds in a Fake Cryptocurrency Exchange

Should you fall for the trick and sign up for a fake cryptocurrency exchange, there are still ways to salvage the situation.

Kindly follow these steps:

• Withdraw Your Funds ASAP: Try to withdraw all your tokens from that exchange once you notice one or more of the above signs. Depending on which is faster, you can convert to fiat or transfer to another wallet not associated with the platform.
• Contact Your Bank and Block Connected Cards: After withdrawing your funds, contact your bank or any payment provider that you had connected to the exchange. If possible, terminate credit or debit cards linked to your account on the exchange to prevent the scammers from accessing your bank account.
• Create Awareness in the Crypto Community: While protecting yourself and safeguarding your tokens, create awareness about the actions of these exchanges. Spread the word on Telegram, Discord, and X. X, in particular, is a very free social media platform with loads of active crypto-community members. It is perfect for spreading awareness about fake exchanges.
• Revoke the App’s Access: Whenever you use applications, they request access from your phone. After withdrawing your money, revoke access to the fake cryptocurrency exchange app. This way, it no longer has access to certain features on your device.
• Report to All Possible Authorities: Depending on your location and the claimed domiciliary of the exchange, you can also report to the authorities. Provide them with as much evidence and detail as possible.