As more and more users flock towards crypto exchanges, the number of scams surrounding them has also increased exponentially. And fake crypto exchanges are at the top of the list of these scams. That’s why it is important to verify an exchange’s authenticity before investing and conducting trade on it. This article will look into these fake exchanges, what they are, and how you can easily spot them.
What Are Fake Crypto Exchanges?
Fake crypto exchanges are platforms that normally appear as legitimate trading platforms but are scams in disguise. The main objective behind these types of exchanges is to steal the data and money of those users who use these exchanges. When we compare a fake exchange to a real one, you will find that the UIs are quite similar. However, the main difference lies in the website’s functionality.
Most of these fake exchanges are only operational for a limited period of time. As the team behind them gets what they want, they move on to create another exchange or scam to fish for new victims. In most cases, they attract users to their exchanges by providing various offers like low transaction fees or high ROI, but their main goal will always be to scam you off your money.
Common Characteristics Of Fake Crypto Exchanges
Most of these fake exchanges have common behavior or characteristics to attract users to their scamming platform. By carefully noting these characteristics, you can mitigate the damage caused by them. Some of these so-called characteristics include:
1. Lack Of Regulation
The fake exchanges do not employ any regulatory measures that users need to follow. You won’t be finding any KYC or other identity verification in them. Lacking of these much-needed verification protocols is a clear-cut red sign.
2. Lack Of Proper Security Measures
Unlike legitimate crypto exchanges that implement heavy security measures in place to protect user’s money and information, fake crypto trading platforms do not employ this type of security. This makes it easy for the scammers behind the operation to disappear with the user’s money.
3. Displaying Fake Trading Activities
Most of these fake exchanges will feature an increased trading volume and other data so as to attract more and more potential victims. Users who see these fake liquidity and other associated data may make use of these exchanges and get scammed in the process.
4. Transparency Issues
Fake exchanges in most cases, don’t provide any information associated with them. In fact, the main reason they thrive in this ecosystem is because of this lack of transparency. They may convey that it is because of their policies or to create a more user-friendly experience for the customers, but the main reason is to scam them.
5. High Return Promises
Almost all of these fake crypto exchanges attract users with the promise of high ROI or little to no transaction fees. Sometimes they also show a fake endorsement with a famous personality, which they created to attract more customers to their platform.
How Can You Simply Spot These Fake Exchanges?
There are many ways to check if an exchange is a scam or not. Some of these ways are mentioned below.
1. Checking License
Most of the legitimate exchanges have a regulatory license or other registration document on their official website. Checking these licenses can help you separate fake from release exchanges in most cases.
2. Conducting Research
If you’re planning to begin trading on a particular trading website, it would be better to conduct thorough research on it on various social media platforms and forums. You also need to pay attention to any complaints raised by the customers of these exchanges.
3. Ensure Proper Security
If the trading platform doesn’t employ any proper security measures like KYC, two-factor authentication, or any other security measures regarding your fund, it is most likely a scam.
4. Double Check Trading Activities
Double-check the platform’s trading volume on any reputable website. If you spot any unusually high trading activity on a platform without any valid reason, be cautious about that exchange and conduct external research.
5. Check Customer Support
Check the customer support section of the exchange. Most legitimate exchanges feature robust and highly responsive customer service. If you are getting a late response from an exchange, then there is a high probability that they are scams.
6. Watch Out For Unrealistic Promises
If an exchange is offering you guaranteed high ROIs or little to no fee on transactions, be wary and conduct thorough research on the said exchange as there is a high probability that they are operating a fake exchange platform.
