2 days ago · The fake Elon Musk BTC giveaway is one of the most successful bitcoin scams, having raked in millions of dollars. Aug 15, · A classic (but no less dubious) scam involving bitcoin and cryptocurrency is simply, well, fake currency. One such arbiter of this faux bitcoin was My Big Coin. Essentially, the site sold fake Author: Anne Sraders. Mar 26, · Now, in a twist, a company hoping to list an ETF has reported to US financial regulators that around 95% of all Bitcoin trading volume has been faked by exchanges. Bitwise, a crypto-asset Author: Mike Orcutt.
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The survey, first reported by The Wall Street Journal, echoes concerns by regulators that cryptocurrency markets are still ripe for manipulation.
Bitwise, an asset manager in the process of trying to list the first-ever bitcoin exchange-traded fund, said it met with the Securities and Exchange Commission on Tuesday to discuss its application. As a part of the process, it submitted analysis that could help regulators cut through the noise. The analysis showed that "substantially all of the volume" reported on 71 out of the 81 exchanges was wash trading, a term that describes a person simultaneously selling and buying the same stock, or bitcoin in this case, to create the appearance of activity in the market.
In other words, it's not real. Its median "spread," or difference between the price a seller wants and the price a buyer wants, for bitcoin was about 1 cent. That scenario passed Bitwise's test for having real volume. Exchanges may have an incentive to report fake volume. Bad actors may look to attract listings for new initial coin offerings, or ICOs, who want their cryptocurrency on an exchange where more trading goes on, Bitwise said.
The office of New York Attorney General also flagged the issue in a recent report warning that exchanges are vulnerable. The men operated BitClub Network for years. The scheme solicited money from investors in exchange for shares of cryptocurrency mining pools. It also supposedly rewarded investors for recruiting new investors. As you can imagine, the investors never got any returns on their investments in the end.
A common scam is to present a new cryptocurrency as an alternative to Bitcoin. My Big Coin was shut down for this reason. If somebody emailed or called and said they were from the IRS and that you owed back taxes that had to be paid immediately, would you send them money?
Unfortunately, many people do. Instead of having the victim wire money via Western Union or transfer funds to a bank account, con artists are contacting victims and demanding that victims transfer bitcoins.
The best way to avoid this scam is to be skeptical of phone calls or emails that say they're from a government agency. Malware has long been a way for hackers to get passwords needed to access computer networks or steal credit card and bank account numbers. If your Bitcoin wallet is connected to the internet, they can use malware to get access and drain your funds if you're not protecting yourself from malware. You can download malware by clicking links in your email.
You can also download it from websites and social media. There might be a post, for example, where someone claims a certain program allows you to mine bitcoins for free. Download it, and you could get malware. If you're not sure of a website or email's legitimacy, contact the company involved directly. If you can't find the company's contact information easily on social media or on its website, that's a red flag. Pump-and-dumps have been around as long as the stock market has.
A group of scam artists will get together and buy up a bunch of penny stocks. This drives the price of those stocks higher, and on the back of these rising prices, they get outsiders to invest in the stock—using big promises of easy money. Unfortunately, new technology has made Bitcoin a target for pump-and-dump scams, something that investors can fall for even if they would never fall for a traditional scheme like this. Often these schemes are promoted with the use of fake news stories and fake celebrity endorsements.
If a person ends up getting caught up in this, it can lead to financial ruin—unless you know how to spot a scam and invest somewhere else instead. You can protect yourself by avoiding single tip purchasing and knowing when something sounds too good to be true. This particular scam has become such a big concern that the U. Commodity Futures Trading Commission has issued a guide that is designed to help investors be aware of the potential risks of cryptocurrency like Bitcoin.
Bitcoin is a volatile enough investment as it is. Stay alert for potential Bitcoin fraudsters and trust your instincts. If something seems too good to be true, it probably is.
Department of Justice. Guide to Bitcoin.