Signs of a scam

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These are some of the red flags of an investment scam.

  1. No company registration number or certificate that could be verified.
  2. No licence issued by a financial regulator anywhere in the world (crypto companies are generally unregulated, but they will still have company registrations, offices, phone numbers and credible directors with a track record of business success; you can, and should, investigate these).
  3. ‘Directors’ who look like pictures of models grabbed off the internet, and when you Google search that image the person shows up as a ‘director’ of other dodgy investment schemes.
  4. Bad English on the website.
  5. Testimonials from ‘satisfied’ customers.
  6. Claims of guaranteed returns.
  7. Claims that you cannot lose your money.
  8. Approaching clients on Facebook or WhatsApp.
  9. Insistence that you invest in bitcoin and send that bitcoin to an address given to you by the scamster (once your bitcoin is sent to that address, it is gone and there is no one who can help you recover it).
  10. Adding weird costs like “cost of transfer” (when you ship bitcoin or any crypto from a legitimate company like Luno, the costs of transfer are already paid by you, and they are generally quite small. You do not have to pay two sets of transfer costs).
  11. Ponzi scheme set-up, start small and then see a successful payout. Comforted by this success, you are encouraged to go bigger the next time. That’s when it unravels. You’ve been had.
  12. Delays in receiving withdrawals: claims of procedural errors in requesting withdrawals, demanding more money (like cost of transfer), and then claiming you took too long, made some administrative error – anything to delay the process.
  13. Claims your investment will go into bitcoin “mining”: there are reputable “miners” (who use heavy-duty computers to solve complex problems and get rewarded with bitcoin) but these companies don’t need your money, and most of them are doing fabulously well. Some of them are listed on stock exchanges and offer an indirect way to gain exposure to bitcoin.

MONEYWEB – 6 April 2021


  • Ciaran Ryan is a Johannesburg-based freelance writer who has a background in finance and mining, having previously headed up a gold mining operation in Ghana. He currently writes for several SA and overseas journals on matters ranging from mining to investment.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

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