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Going to War Against the Bitcoin Scam Industry

Considered by many the most revolutionary breakthrough of the 21st century, Bitcoin continues to surprise the world with its allure and resilience.

Launched in 2009 as a way to create a decentralized method of exchanging money, Bitcoin is by far the world’s biggest and most valuable cryptocurrency. It peaked at around $20,000 per coin in 2017 and today’s value is just under half that amount.

The Bitcoin Scam Industry

The rise of Bitcoin and the cryptocurrency industry it fathered has created great interest and attention over the last ten years. Nobody is certain as to the projection Bitcoin’s value will take over the medium-to-long term. This uncertainty, however, has not deterred investors from purchasing and trading the commodity.

Such interest and attention has unfortunately given rise to a number of criminal entities that seek to take advantage of innocent and unsuspecting victims through cybertheft and cryptocurrency fraud.

Recent investigations into the darker side of the cryptocurrency world have revealed that victims have been scammed out of an estimated $16.5 billion in digital currencies since 2011.

Types of Bitcoin Scams

The number of Bitcoin scams that have surfaced are too many to list. Hackers and scam artists continue to develop new ways to defraud their victims. New scams surface almost on a daily basis. Below are a few of the most notorious of these:

Fake Bitcoin Exchanges

The rise in popularity of Bitcoin and other cryptocurrencies has created an increase in fake Bitcoin exchanges. These exchanges deceive their users by offering excellent market prices, giving the impression that the user has made a great investment. The user however, discovers later that the Bitcoin exchange is fake and the scammer has run off with the money.

Bitcoin Ponzi Schemes

Similar to mainstream investment scams, the scammer receives Bitcoins from new investors in order to settle accounts with previous investors. This inevitably results in the investors never receiving a return on their Bitcoin investment.

Fake Cryptocurrencies

A common scam is to release a new cryptocurrency to the market that promises to rival existing ones. The premise is that the time to invest successfully in existing cryptocurrencies has lapsed and that it would be a great investment idea to purchase a new up-and-coming cryptocurrency. This new cryptocurrency may be featured on a fresh, professional looking website. You can bet that it will exaggerate their client base. The purpose is to create a ‘fear of missing out’ illusion forcing victims to scramble to jump on board.

Malware

Using sophisticated techniques, scammers can access your wallet and deplete your funds if you do not have the required malware protection. Malware can be downloaded by clicking on links from unknown email sources, downloaded from the internet and social media, and elsewhere. 

How to Avoid Getting Scammed

The best advice is to trust your instincts and go with the common wisdom that if something seems too good to be true, it probably is.

Other tips to protect yourself from Bitcoin fraud is to:

  • Stick to popular, well known Bitcoin exchanges
  • Ensure you have updated virus and malware protection
  • Keep up-to-date on the latest Bitcoin news and red flags
  • Research and double check your sources before making a decision to purchase
  • Do not trust anyone that approaches you for an investment opportunity

What to Do if You Have Been Scammed

If you have fallen victim to a cryptocurrency scam, take a look at www.mychargeback.com, a U.S.-based company that has successfully recovered over $15 million since opening their doors in 2016.

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Police Nab Trade12 & HQBroker Syndicate

Ukrainian Police Arrest Criminals Operating HQBroker and Trade12

After months of complaints that went unheeded, the Ukrainian police finally arrested criminals that were operating two fraudulent online trading sites, HQBroker and Trade12. Police made the arrests late on Friday, December 14.

According to the official police report, these scam companies had offices in Kyiv, Kharkov, Dnipro, Zaporozhe, Mariupol and in the Dnipropetrovsk region. Police throughout Ukraine conducted over 25 search operations in offices belonging to the purported criminals running these several operations.

The Extent of the Scam

Officers confiscated over 200 phones, computer equipment, along with other devices. They additionally seized cash, drugs and claim to have found documents that confirmed the illicit nature of the entire operation, including merchant checks, invoices, bank transfer records and customer information.

Altogether, the police arrested nine of the accused. In their extensive report, the Ukrainian police stated that the operation was run by a 34-year-old individual from Kyiv.

Trade12 & HQBroker Still Running

The group was operating two fraudulent trading websites, one named Trade12 and the other called HQBroker. Unfortunately, both of the sites are still active and as far as we know scamming plenty of unsuspecting victims. Ukrainian officials have confirmed that the group used around five different shell companies in order to hide their dubious activity from law enforcement officers.

Even more disturbing was that the police additionally stated that the companies were using software that enabled them to take control of the victim’s computer. Furthermore, Ukrainian officials believe the brokers were not executing any trades. Instead, they provided the victims with a trading platform that merely mimicked movements in the market. The companies just took client deposits and subsequently withdrew them into offshore bank accounts and placed a replicated balance on the trading platform.

Take Action Today

If you were the victim of Trade12, HQBroker or any other online trading scam file a formal complaint here and we will assess your case and put you in touch with a regulated fund recovery service or lawyer that specializes in financial fraud.

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Binary Options Recovery Scams – The New Villain

Scamming those who have been scammed! So-called recovery experts are scamming those who lost money to online trading scams.

Many individuals who have come across Broker Complaint Registry will, unfortunately, be accustomed to a whole gamut of fraudulent binary options and forex brokers that made up a large swath of the online trading industry. From fixing trades, denying withdrawals and enabling horrible trades, numerous brokers made millions conning innocent people of their hard-earned money.

Because of these aforementioned reasons, a number of regulatory authorities across the globe have now barred the sale of binary options to retail traders. Just a few weeks ago, for example, the European Securities and Markets Authority (ESMA) proclaimed that it would be extending its binary options ban for an additional three months.

These sanctions may stop traders from being conned in the future but for those who have already lost their funds, it only provides minor solace. In fact, getting funds back from con-artists, who are almost completely anonymous, has been a challenge for most binary options other online trading scam victims.

Scam Recovery Service – The New Villain

Unfortunately a new sort of scammer – the so-called ‘recovery expert’ has come onto the scene. They specifically prey on those scam victims and often convince them to part with even more of their money and – they’re pretty good at it.

Finding these recovery scam-artists is not too difficult. Just take a look at the comments section of any news article pertaining to forex or binary options trading and you are likely to find a number of posts with the form of the following message: I lost a ton of money trading binary options with ‘xyz’ company, thankfully company X recovered my money for me – just email company X here to find out more.

Here at Broker Complaint Registry, we have discovered a number of fake recovery websites with the same layout: phony office addresses, fake US phone numbers, no license or regulation and no clear indication as to who actually works or runs the company.

One of these companies, Finance Fraud Recovery has a number of positive reviews dating back to May 2017 when in fact they only came into existence approximately one month ago. These are the type of scams victims are facing after they have already been scammed once.

Another website, Optionsrefund, lists its address as being in Christchurch, New Zealand and provides users with a US contact number. The site, however, was registered in Canada and the person that set it up did not provide any name or contact information. Trying to figure out who runs these sites is challenging but, in a number of cases, we can certainly tell that they are not based where they claim.

Beware of those non-regulated fund recovery services

The online trading industry is fraught with non-regulated brokers such as Greenfields Capital to KayaFX masking to be legitimate financial service providers. The same stunt is being pulled in the fund recovery industry. These companies dupe their hapless clientele by claiming to have incriminatory intel against these scam brokers and charge an upfront fee in order to get the case off the ground require up-front, with the minimal likelihood of ever seeing that money again. Remember it is not the initial payment that is problematic as almost all legitimate companies in any industry require some sort of a down payment. This is especially true in the fund recovery business as it is not a given that they will be able to recover the money as there are so many mitigating factors that go into each and every case.

A number of these fake recovery companies even offer state of the art hacking services. Take Binary Options Recovery Specialist, their hacking services include password recovery and credit score editing in addition to their binary options recovery resources. Anyone who wants to utilize any of their services must also pay in some form of cryptocurrency – making it practically impossible to determine where the money is actually being sent.

How can this be prevented?

There is one predominant factor that is driving these scam websites. Those that have lost money from binary options and other online trading scams are generally desperate. These are not multi-billionaires or millionaires who can stand to lose a few hundred thousand dollars or pounds but regular individuals who probably forfeited their whole life savings.

Anyone in that unfortunate situation is almost always desperate for assistance especially when the regulators and other authorities are often at loss as to how to take down these scammers as they are often located offshore. This is where the recovery scam artists come in as they claim they have the necessary capabilities to pursue these binary options and forex brokers.

Preventing such people from operating seems like a Herculean task. Those that own the sites are often difficult to find and, as soon one is shut down, another pops up somewhere else along with a recovery firm targeting those victims. However what you can do is alert us at the Broker Complaint Registry, the financial ombudsman, your banks, social media and everyone in between. Additionally, when you submit a complaint to us we will review it and put you in touch with a regulated fund recovery service or lawyer that specializes in financial fraud.

Listed below are seven scam recovery companies that we have received complaints against. If you were a victim please submit your complaint here. Obviously, there are additional fraudulent recovery companies that are operating if you are aware of them please send us an email at [email protected] and we will do our best to spread the word

  • Capital Chargeback
  • Optionsrefund
  • Finance Fraud Recovery
  • Binary Option Asset Recovery
  • Financialchargeback
  • First Options Recovery
  • WorldTradersRecovery
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Avoid the Financial Commission

Is the Financial Commission Assisting the Brokers?

Regulatory oversight is absolutely pivotal in all sectors, including the Forex market. To facilitate this, every nation’s financial watchdog oversees the Forex market to guarantee that it plays by the rules. However, in some cases, an external dispute resolution service can also be used instead if the country’s regulatory body is unable to intervene. However, one must be extremely careful when using an outside dispute resolution service as some of them such as the Financial Commission often take the side of the brokers.

Financial Commission – Who are they?

The Financial Commission (FinaCom) was created about in 2013 as an independent regulator of the FX market. Today, FinaCom has approximately 30 Forex brokers registered with them, some of them committing major scams in the industry.

Financial Commission = Conflict of Interest

The Financial Commission depends on the Dispute Resolution Committee to deliver a verdict. This is a group of industry leaders who listen to disputes between brokers and their clients. That might be an advantage, but it also presents a clear conflict of interest. The Financial Commission members may be less inclined to rule against a broker, who is their client since they are the ones who pay the company. Therefore, inasmuch as the board members may know exactly what is going on, they may be less inclined to go against their peers in the industry and also their clients.

Furthermore, FinaCom does not have any legal authority to persecute brokers who go against the law as much as a financial regulator created through an act of parliament. That means they just depend on a mutual agreement to solve the disputes rather than the actual law. Consider a case where a Forex broker has numerous complaints against him; if they were prosecuted by a financial regulator, the broker would be liable for all damages. However, according to FinaCom’s Compensation Fund, only the fund balance is distributed equally among the complainants.

There is also a maximum compensation per client – $20,000 for Category A members and $5,000 for Category B members. Even if the client is owed more, the Financial Commission cannot exceed these amounts in compensation. In the case of a broker going bankrupt, for example, FinaCom would not have any authority to demand compensation either. This could happen to any Forex broker as it happened to several in January 2015, including FXCM, which was one of the largest Forex brokerages. That is because FinaCom does not have the legal authority to pursue client compensation in such events.

Victim of a Financial Commission Scam?

If the broker that you are interested in has a stamp of approval from the Financial Commission we believe that you should stay far away. If you were the victim of a Forex scam by any of the brokers associated with the Financial Commission make a complaint here and we will do our best to assist you in any way that we can.