A report released by major crypto exchange Binance illustrates how scams targeting cryptocurrency investors attempt to gain credibility.
In the report published on June 30, the exchange explained that its Binance Sentry risk investigation service observed reports of fraudulent investment schemes promising quick or exponential returns on cryptocurrency investments. The frauds do not just concern crypto but also forex, binary options and contracts for difference (CFDs).
Binance published the report after a Bitcoin (BTC) scam targeted the residents of Winnipeg, Canada, in late June.
Scams are often well-organized, big operations
Scam organizations are frequently the subject of regulatory warnings but often use different, seemingly unrelated brands. In fact, what seems like dozens of projects can often be just different branches of one big operation. In some cases “one brand might be crypto-specific, another may focus on forex or CFDs”.
Some fraudulent entities create false ‘consumer organizations’ that squeeze victims for even more funds after they become suspicious that the organization is a scam and try to report it. Projects often fabricate regulators and governmental agencies such as corporate registers in an attempt to earn the trust of investors.
Binance Sentry also notes that the global nature of many of the scams, make legal action against them harder. The report explains:
“[Scam] victims are often situated all over the world, living in jurisdictions that are different from the pseudo-services to which they fall victim. [...] As one may expect, this not only results in an increased level of difficulty for law enforcement investigations but also complicates the process of establishing connections between victims.”