This post is a part of our educational activities aimed at helping you identify and protect yourself from fraudulent schemes abundant in the cryptocurrency industry. Last time, we shared insights on How to Not Become a Victim of Scam in Telegram Crypto Communities. In this post, you’ll learn about the nature of popular investment management scams and get recommendations for dealing with them. 

At CEX.IO, we are committed to protecting our customers from scammers, deceitful investment managers, and fake brokers. We do not condone fraudulent activities and maintain enhanced security measures to identify and prevent fraud. However, you, our customers, remain solely responsible for securing access to your own accounts. In other words, if a scammer convinces a CEX.IO customer to voluntarily transfer funds towards an investment proposal that turns out to be a scam, we are unable to prevent the customer from transferring those funds or to reverse that action after the fact. 

How Investment Scams Work

Investment fraud is one of the most popular financial crimes today. As cryptocurrencies have moved into the mainstream, it has become extremely easy for fraudsters to pose as investment managers and target consumers with scams. Fraudsters create attractive offers that are too good to be true, often using images of luxury items or fake celebrity endorsements. Usually, people are offered to invest money in something that is alleged to guarantee a profit (i.e. “get rich quick”).

Schemes involving crypto assets often work as follows:

  1. A scammer poses as an investment manager and offers an individual to invest funds in some asset(s) to get a profit. 
  2. To enable the individual to invest, the scammer guides him/her through registration and verification on a crypto exchange. 
  3. The individual deposits fiat money and purchases cryptocurrency. 
  4. The scammer asks the potential victim to send the cryptocurrency to some address. 
  5. In the end, the money appears in the scammer’s wallet. And, as crypto transactions are irreversible, it is not possible for the victim to request a refund or a chargeback. 

As a rule, such fraudulent investment managers disappear without any contact. Some of them mislead people by making them believe their first investment has successfully made a profit. However, they soon start asking for additional funds to withdraw the “profits,” the returns stop, and the scammer vanishes.  

A variation of this scheme includes a scammer photoshopping a screenshot of a transaction where he supposedly sends profits to the victim via an exchange. But the profits somehow get “stuck on the exchange side.” So the misled victim with the transaction screenshot goes to the exchange only to discover that the transaction never actually happened.

How to Protect Yourself from Crypto Scams

  1. Slow down. Scammers are almost always in a hurry. Whether you’re scrolling the web, answering a cold call, or receiving an unsolicited request from someone on social media, make sure to stay cool and rational. Do take some time to think about what’s being offered to you.
  2. Don’t fall for attractive offers. Professional-looking and attractive ads, Facebook posts, and websites don’t necessarily mean a legitimate investment tool. We strongly recommend avoiding investment offers that seem too good to be true. If it seems too good to be true, it most likely is. 
  3. Double-check information. Thoroughly research an investment firm or professional you are dealing with. Check credentials, licenses, their track record. You can google a company’s name — or even a phone number — to check if others have reported a person or organization as a scam. Definitely try to obtain references and recommendations from people you trust (and those should not be people from a Telegram community, who you never actually met).
  4. Don’t send cryptocurrency to unknown addresses. Crypto transactions are irreversible in their nature, so think twice before transferring funds anywhere. If you have any suspicions, don’t pay. Once you send the money, you won’t be able to request a refund or a chargeback. 
  5. If you realize you’ve been mousetrapped, do not continue sending money. Sometimes people come to the realization that they were deceived. But, instead of immediately stopping any dealings with scammers, in hopes to get their money back, they continue sending funds. As a result, scammers extract more, while teasing a desperate victim with the possibility of recovering some losses. There is no turnaround here – so minimize your losses!

Scammers May Lurk in the Familiar Places

At CEX.IO, we place a considerable effort into developing our Telegram community. At the same time, the nature of Telegram is such that it is impossible to always identify and stop people with malicious plans from joining our community. It is common for such people to try establishing rapport with other community members by appealing to having something in common with them. Just because you share the same Telegram group with someone does not mean they can be trusted.

These days it takes no effort to create a community channel or put up a website. Hence, we are no strangers to seeing impersonators copying our design, our content, and our profiles to mislead people. Even a single letter in a URL can be all that distinguishes an official source from a scam. So we encourage you to be very attentive. 

Official Channels for Communication

As we care about the safety of your funds and information, we would like to remind you about our official communication channels and how we work.

We do utilize social media to spread our message and to hear from our clients. However, these channels are not secure for handling support issues and we do not provide support via these channels. Our secure ticketing system and support email are the only channels for support.

As a reminder, here are our official channels:

We also send newsletters to inform you about important changes. Emails sent from CEX.IO always come from an email address ending with @cex.io and never include attachments.

Keep in mind that even the emails can be spoofed! An email may seem like it came from a familiar legitimate sender, but, if you check the raw email data, you discover that an email came from someone else (more on that in later posts!).

Whenever in doubt about any communications purporting to be from CEX.IO, you can always contact us to double-check if the message is legitimate.

CEX.IO Customer Support Team Principles

Last year, we started offering phone support for our registered users. You can easily find our phone number after you log in to your CEX.IO account. If someone tells you another CEX.IO support phone number, do not trust them.

Read through the rules we follow so you can identify scams related to support issues.

  • The CEX.IO Customer Support Team solves customers’ issues for free. If someone claims to work for CEX.IO and offers to help you for money, do not tell them anything about your account and do not pay them.
  • CEX.IO doesn’t offer accelerated support or let users pay to jump the line. Any offer of such kind should ring a scam alarm in your head.
  • The CEX.IO Customer Support Team will never ask for your passwords or CVC codes. If someone claiming to be from CEX.IO tries to get such information, do not give it to them.

Always remember that you can easily contact the CEX.IO Customer Support Team via the form on our Help Centre or by phone. Our agents will do their best to answer your questions in the shortest time.

And, finally, always stay alert! Do your due diligence! You are a member of a fascinating industry! Do not let scammers ruin your experience.