A fake exchange is a fraudulent online platform that pretends to be a legitimate cryptocurrency exchange but whose sole purpose is to steal your digital funds or personal information.
How does a fake exchange work?
Scammers go to great lengths to make these fake platforms look as authentic as possible, but behind the facade is a well-orchestrated scheme:
1.Near-perfect impersonation: attackers clone the design, logos and even the structure of legitimate exchanges, or create a new website with a very professional look. They often use domain names very similar to the real ones (e.g. “https://www.google.com/search?q=Binancce.com” instead of “Binance.com” or “Coinbaze.com” instead of “Coinbase.com”).
2.Exaggerated promises: In order to attract victims, these fake platforms often offer “bonuses” on registration, incredibly high guaranteed returns on investments (which do not exist in reality) or extremely low trading fees. These offers are “too good to be true”.
3.Luring victims: Users are lured to these sites by various methods:
- Phishing: Emails or messages that appear to come from legitimate exchanges, containing links to the fake site.
- Social networks and ads: Misleading ads on popular platforms.
- “Pig Butchering” scams: A person (usually a fake “investment manager”) contacts you and convinces you to invest on this platform.
4.Depositing funds: Once convinced, you are directed to deposit cryptocurrencies (or even fiat money) into your account on the fake platform. At first, the interface might even show you a growing “balance” to boost your confidence and encourage you to deposit more.
5.Blocking withdrawals or charging extra fees: This is where the fraud starts. When you try to withdraw your funds, you will encounter various obstacles. Either the withdrawal is impossible or you are asked for absurd additional “fees” (“verification fees,” “taxes,” “liquidity fees,” etc.) to unlock the funds. These fees are just another way to steal more of your money.
6.Platform disappearance: Once they have squeezed as much money as they can from the victims, the platform simply disappears, along with all the funds deposited by users. The website becomes inaccessible and the “customer support” service disappears as well.
You can read more in our article: “The cryptocurrency market: the $3 trillion industry that almost nobody understands”.
The dangers of a fake exchange
- Total financial loss: Funds deposited on a fake exchange are, in most cases, irrecoverable.
- Personal data theft: In addition to money, these platforms can collect sensitive data such as identity information (fake KYC), which can then be used for identity theft.
- Malware installation: Some fake sites may try to install malicious software on your device, giving attackers access to other accounts or data.
How to recognize a fake exchange
- Suspicious URL: Always check the exact URL in your browser bar. Look for subtle misspellings (typosquatting) or unusual domain endings (.xyz, .top, .online instead of .com, .io, .net).
- Unrealistic promises of profit: No legitimate exchange can guarantee large and quick profits. The crypto market is volatile. If it sounds too good to be true, it probably isn’t.
- Lack of regulation/licensing: Legitimate exchanges are generally regulated and licensed by the financial authorities in the countries where they operate. Look for this information on their website.
- Negative (or too few) reviews: Look for reviews and experiences of other users on independent forums, Reddit, Trustpilot. Be suspicious if you find only extremely positive, repetitive or very few reviews.
- Withdrawal problems: Any problem or request for extra fees to withdraw your money is a clear sign of fraud.
- Pressure to invest: Aggressive marketing tactics that pressure you to deposit money quickly without taking the time to research.
- Lack of real customer support: If the only way to get in touch is a rudimentary chat or an unanswered email address, it’s a red flag. No phone number or verifiable physical address.
- Site quality: Although many fake exchanges look good, you can sometimes find grammatical mistakes, broken links or generic content.
- The context through which you reached it: Were you contacted by a new “friend” online? Clicked on a suspicious ad? Context is important.
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