Binary Options Scams

Don’t Let Them Mislead You – It’s All Smoke and Mirrors

Challenging binary options scams can be very complex and mistakes can cost you. MyChargeBack analyzes your case and assists you throughout the entire recovery process.

In the first two decades of the 21st century the internet became Ground Zero for binary options scams and binary options fraud.

Perhaps what first drew you to their website was a pop-up ad. Or a social media post. You clicked and found an attractive, professional -looking presentation promising you:

• A quick, profitable return
• A huge immediate bonus just for joining
• An easy-to-manage online binary options platform

You signed up and soon their representatives contacted you. They introduced themselves as your “brokers.” And then you transferred funds, most likely using your Visa® or Mastercard.® Soon, you found yourself trading stocks or foreign currencies, indices and commodities. To help you out, your “broker” courteously provided personal coaching. And timely recommendations. (Real brokers cannot do that because it’s patently illegal).

While legitimate, government-regulated online brokerages do exist, their many more unregulated firms – especially those offering binary options – whose operators based their business models on swindling unsuspecting and inexperienced investors over the internet.

It’s a Video Game

You assumed the unregulated firm’s state-of-the-art internet site would allow you to trade. Actually, however, it’s nothing more than a video game. The binary options platform it features does not follow obligatory trading rules and procedures. In fact, it’s not even plugged into a true market exchange. The gains you supposedly made and the losses you supposedly suffered, are all imaginary. Nothing more than smoke and mirrors intended to convince you it’s for real. Oh, and that bonus you supposedly received? It was just as imaginary as everything else.

What Happens with Your Money?

Unregulated brokers promise you that they deposit your funds in a segregated bank account. They like to think that they will prove their integrity and convince you that they guarantee your access to your funds. However, no such personal account exists. That also is a fiction. Your funds went straight into their own bank account instead.

Sure, they promised that you could withdraw your money whenever you want. But you will soon find out that’s easier said than done. Some firms will ignore your requests to access your funds outright. Others will bounce you back and forth between different departments in order to exasperate you. To the point when you’ll just give up. And then there are those that will point to the small print on the Terms & Conditions page. Squint your eyes and you will see that you agreed to first reach an unattainable amount of trades. Or repay that huge bonus they gave you before you even apply to withdraw your money. Or both.

A Binary Options Scam by Any Other Name Is Still a Scam

For about ten years, online binary options scams were ubiquitous. The damage they inflicted on consumers was enormous. In response, a growing number of countries banned binary options trading by retail investors. In 2018 the European Union (EU) enacted a temporary ban as well. It renewed that ban on an ongoing basis until July 1, 2019. By then the last online binary options site registered in the EU finally shut itself down. In addition, Google and Facebook ceased accepting ads linked to binary options sites. These actions, as welcome as they were, however, merely encouraged many operators of phony binary options sites to re-brand themselves. They now claim to be online forex brokerages and even private banking firms.

Beware. The terminology changed but the scam remains the same.

If you think you have been victimized by a binary options scam, consult with the fund recovery experts at MyChargeBack analyzes your case and assists you throughout the entire recovery process.

Crypto Scams

Crypto Scams Are Profitable 

The entire virtual currency market reached a capitalization of nearly $2 trillion dollars in just 12 years. By the end of 2017, the price of a single bitcoin was $13,889.99.  It is no coincidence that just a few weeks later the U.S. Commodity Futures Trading Commission (CFTC) filed the first three lawsuits against cryptocurrency scams. The suit accused the individuals who ran them of fraud, misrepresentation and misappropriation in connection with bitcoin trading.

Con artists eye digital currency because it promises instant profit. Law enforcement authorities in every major country are now on the alert for cryptocurrency scammers.

Crypto Scammers Are Inventive

Cryptocurrency scammers are inventive and never fail to come up with a new way to steal your coins. One report claimed that during the COVID-19 pandemic, for example, that bitcoin extortion scams shot up by 1,300% in one month alone. Most of them involved sextortion.

Quite literally, crypto scammers think of everything. Want to commit suicide? There are Facebook pages advertising poison pills you can order by paying in bitcoin. Apart from the brashness and ghoulishness of it, the pills are fake. The bitcoin the scam victims sent, of course, wasn’t. 

Most victims, however, report falling for one of the six types of cryptocurrency scams below.

Pump and Dump Schemes

This is a veteran scam perfected by Jordan Belfort and popularized in the movie The Wolf of Wall Street. Scammers “pump up” or promote an “altcoin” they own in bulk and then sell it off in bulk once the price peaks. Of course, they were the ones who peaked the price in the first place by artificially increasing demand. What made Pump and Dump especially viable for scammers and especially dangerous for investors was the glut in under-sold Bitcoin alternatives (there were 45 of them by the end of 2017). By the way, speaking from his own experience, Belfort called cryptocurrencies “a wolf in sheep’s clothing.” He added that initial coin offerings (ICOs), the initial price for a new cryptocurrency, were “the biggest scams ever.”

Investment Clubs

They may be popular, but the only ones who profit from online crypto “clubs” are the scammers who run them. Their sites certainly look real. Like binary options sites, they’re also sure to feature photos of satisfied members who claim they made megabucks by trusting the hidden cryptocurrency pros who stand behind the curtain. But again, just like with binary options scams, the last time you see your money will be when you hand it over to them.

Fake Exchanges

Fake cryptocurrency exchanges are easy to find. They’re all over cyberspace. They’re especially dangerous for first-time investors. They will find it hard, if not impossible, to distinguish fake exchanges from real ones. In December 2017, Korean authorities closed down one of them, BitKRX. What was particularly pernicious was that BitKRX usurped the last three letters of its name from KRX, the Korean Stock Exchange. It purposely misrepresented itself in order to provide itself with a veneer of legitimacy.

Fake Wallets

No scam fits cryptocurrencies as well as fake wallets do. “Altcoins” are bytes of data, rather than metal. Therefore, owners have to park them somewhere online in a “digital wallet.” Innovative scammers with good marketing skills set up their own digital wallets. They then aggressively advertise for customers to come along and park their digital currency. Once they do so, their cryptocurrency disappears forever. And the operators of the fake digital wallet fade into the digital sunset.

Social Media Crypto Scams

Bill Gates, Jeff Bezos, Elon Musk, and Warren Buffett. Kanye West and Kim Kardashian, rapper Wiz Khalifa and YouTuber MrBeast. Barack Obama, Joe Biden and Mike Bloomberg. Apple, Wendy’s, Uber, and CashApp. What do they all have in common? 

The short answer is influence. The full answer is that they are all on Twitter, they have gazillions of followers and hackers hijacked their Twitter accounts. Same with Bitcoin and Ripple, online cryptocurrency news site Coindesk and the cryptocurrency exchange Binance. Cyber criminals targeted their Twitter accounts in what may very well be the most widespread and successful simultaneous hacking attempt ever.

After logging in, the hackers tweeted out faux messages claiming that the celebrity would double any amount of bitcoin they were sent. Some of the tweets (including the one attributed to Barack Obama) also noted that the sudden generosity was due to COVID-19.

The half-hour deadline, of course, was necessary because the hackers knew that from the moment they clicked on “Send” the clock would be ticking. They would be lucky to have even that much time before the true extent of the scam would be discovered and their phony posts were removed. Victims had to be found and suckered into the scheme before it was too late. And it was successful. The scammers walked away with 12.5 bitcoins, the equivalent of $121,000. Not bad for one night’s work. They lost out on another $278,000 because an alert cryptocurrency exchange intervened to prevent it.

Ponzi and Pyramid Schemes

Needless to say, most cryptocurrency investors acquire digital currency because they believe that their investments are going to appreciate in value at a rapid pace. So why would someone offer you a higher interest than the market currently bears? The most obvious answer is because the offer is a red light for a cryptocurrency Ponzi or pyramid scheme. One of them, GladiaCoin, promised to double the value of all Bitcoin deposits within 90 days. It collapsed from its own weight in June 2017. The phenomenon will continue. There are other such online schemes that also employ the same 200%-in-90-days business model. They eventually will collapse as well. The main difference between the operators of these sites and Charles Ponzi, who gave his name to this type of scheme, is that these guys, unlike the late Mr. Ponzi, are anonymous.

If you think you have been victimized by a cryptocurrency scam, consult with the fund recovery experts at MyChargeBack analyzes your case and assists you throughout the entire recovery process.

Forex Scams

Introduction: Forex and Forex Trading Scams

What Makes Forex Trading Scams Look so Legitimate?

Forex (a contraction of “foreign exchange,” often abbreviated as FX) is the market in which investors trade currencies. The forex market is the largest, most liquid market in the world in terms of the total amount of cash traded. The average daily sums measure in the trillions of dollars. It includes every currency in the world. And that is what makes forex trading scams look so real.

When trading forex, a seller agrees to pay a buyer the difference between the current value of an asset and its value at a specified contract time. In the event the difference turns out to be negative, the buyer pays the seller. People, businesses and governments can all be forex sellers or forex buyers. Or victims of forex trading scams.

There is no single central forex market. Investors trade over the counter in all major financial centers. These include Frankfurt, Hong Kong, London, New York, Paris, Singapore, Sydney, Tokyo, and Zurich. Besides those specific cities, countries with growing forex markets include Bulgaria, China, Malta, Romania, Russia, and the Arabian Gulf states. Unfortunately, some of them also host growing forex trading scams.

Not surprisingly, investors trade the U.S. dollar more than any other currency. They most frequently exchange it for euros, followed by the yen, the pound sterling, and the Swiss franc. Slight market fluctuations are responsible for profit or loss. These typically result from a combination of short-term speculation, major economic indicators and interest rate differentials.

Spot vs. Forward Trading

Forex transactions take place either on a “spot” (immediate) or a “forward” (later) basis. The definition of “spot” is two business days for most currency pairs. Those two days exclude weekends and legal holidays in the countries that issue the relevant currencies. Brokers can schedule forward trades by agreement at any time in the future, other than a weekend or holiday. A forward trade will take into consideration the interest rate differential between the two currencies. Transactions that mature more than a year later are relatively unusual, but possible. In any case, investors in forward trades exchange funds not on the day of the transaction but rather on the settlement date.

Futures

A “future” is similar to a forward. But to execute one a trader must specify the amount in advance, schedule it on a specific date and use an exchange. The buyer pays a portion of the value of the contract up front and either pays or receives money based on the change in value.  Speculators are the most common traders of futures. Contracts are usually closed out before maturity.

The Advantages

• Forex provides an option for every budget and every investor with a different appetite for risk taking
• Transaction costs are extremely low compared to other types of trading
• The forex market operates 24 hours a day, seven days a week, closing only for major national holidays
• Information regarding forex markets is easily accessible and simple to understand
• The global forex market is so huge that no country, central bank or single investor can corner the market or rig prices for an extended period of time

The Disadvantages

• Time differences between major financial centers around the world can affect exchange rates
• Individual traders should use algorithms to protect the value of their investments when they are sleeping, in transit or otherwise indisposed
• A relatively small adjustment in the price of a contract may yield immediate and substantial losses in excess of the amount invested
• Changes in the forex market are usually small, unless they are “leveraged” through low margin deposits or trade collateral

The Risks

• The other party to the transaction may not have the intention or the ability to honor a contract
• Sudden unexpected news (catastrophic weather or earthquakes, for example) usually affect the market
• There is almost no government regulation, so investors have few, if any, protections
• Traders may lose all of their investment in a matter of minutes, even before deducting brokerage commissions, if they place highly leveraged bets

Caveat Emptor: How to Avoid Forex Trading Scams

Forex trading by retail investors is not legal everywhere. Some countries permit it, many restrict it and others ban it outright. Therefore, investors should check with their national financial regulator what the legal status of retail trading is in their country and what restrictions may apply.

In any event, always confirm that any financial or investment firm you are considering is not the subject of a scam warning issued by a regulator, professional association or consumer protection agency. That is the surest way to avoid forex trading scams.

If you have been victimized by an unregulated forex brokerage, challenging them can be very complex and mistakes can cost you. MyChargeBack analyzes your case and assists you throughout the entire recovery process.