Texas shuts down fraudulent crypto traders
Top tier cryptocurrencies attract scammers as well as investors.
Last week, Texas issued an emergency stop order against a fraudulent cryptocurrency trading program. Texas-based C3 Data Services and UK-based Bitles Ltd are accused of offering fraudulent products and are no longer permitted to sell securities in the state.
According to the ordinance, the companies used the following claims to attract investors:
- They have proprietary algorithmic trading software that allows them to trade on various crypto exchanges.
- They can pay 0.3% to 6.0% daily returns on cryptocurrency and US dollar investments
- Their BTL crypto tokens will appreciate 10% to 60% per month
The Texas State Securities Board (TSSB) says these claims are all false.
Joe Rotunda, TSSB’s director of enforcement, warned that the recent sharp rise in cryptocurrency prices was fertile ground for scams. âUnfortunately, the promoters of illegal get-rich-quick crypto programs are taking advantage of these changes in the market – leveraging the public interest to sell fraudulent products,â he said.
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How to avoid crypto scams
The TSSB was the first state regulator to take action against fraudulent crypto firms in 2017, and it continues to actively pursue this type of activity. But you can also take steps to protect yourself.
- Use a exchange. As the market becomes more mainstream, cryptocurrency exchanges need to work harder to show that they will be responsible for your money. Look for those with strong security credentials and a good reputation.
- Research your investments. Any part you buy should have a white paper that explains what it does and who is involved in the project. It’s also worth checking which exchanges are exchanging the coin. Some are too small to be on the main platforms, but you will always find information about them. But if a coin is not listed, like the Texas BTL token, it could be a scam.
- Do not give anyone access to your wallet or trading account. Scammers can call pretending to be customer service agents, seeking your account details. But support staff should never ask you for passwords or other access information. If in doubt, hang up and call the company directly.
- Understand how you receive interest. There are several crypto exchanges that pay interest. Interest rates are often higher than what you’ll find with a high yield savings account, but none of them pay 6.0% per day. Visit an exchange’s website and make sure you understand how they pay better rates than traditional banks. For example, it can provide decentralized finance loans (DeFi). A DeFi loan uses blockchain technology to make crypto loans that don’t need an intermediary. If so, you need to be comfortable with the risks involved. Your trade may also allow you to ‘stake’ your coins, which binds them for a period of time and earns interest.
If you are approached with an offer that appears to be fraudulent – for example, it promises incredibly high returns on your investment – contact the SEC or your national securities board. I hope you will be able to make sure that no one falls victim to the scheme.
When it comes to crypto investments, prevention is better than cure
Scams aside, this is a relatively new and volatile industry. This means that he has a lot of potential, but also a lot of risk. The value of the cryptocurrency you invest in can skyrocket, but it can also drop – and in some cases the coin can fail altogether. That is why we recommend that you do not invest the money that you might need in the short term.
For example, The Ascent’s parent company, The Motley Fool, invested in Bitcoin because they believe the currency has long-term value. But it’s not here for a short-term gain – if Bitcoin’s value drops tomorrow, The Motley Fool is ready to weather the drop.
If you are looking to buy Bitcoin or another currency for the first time, do your research and slow down. Don’t rush because you’re afraid you might miss something. If your Bitcoin is stolen, it will be difficult if not impossible to recover it, so it is best to exercise caution.