The price crash in cryptocurrencies through the first half of 2022 has been painful enough for those holding the likes of Bitcoin and Ether, but it now looks like the bad news could be about to get worse. As is often the case with markets prone to Ponzi schemes, the price crash in cryptocurrencies is exposing those fraudsters who can no longer rely on cash from new entrants to keep their schemes afloat. The US regulator CFTC believes that in the case of Mirror Trading International, the books appear to have been cooked to the tune of $1.7bn.
Market risk is one thing with cryptocurrencies and something that most investors factor in. The chance of making a life-changing amount of money needs to be weighed against the risk that all of your funds could be wiped out. Trading in small size, diversifying positions and using only funds that can be afforded to be lost can help manage the downside. Operational risk, the chance that your broker is a scam and doesn’t return your funds, is another matter.
Scam brokers such as Mirror Trading International often offer promises of returns that are too good to be true. Once on the hook, victims of fraud are then likely to not only lose their initial stake but to also realise that any ‘paper’ profits are worthless as those funds are also syphoned off.
The Mirror Trading International fiasco drew in a global client base of unlucky investors, all promised up to 10%-a-month gains thanks to the platform’s supposedly innovative ‘trading bot’ functionality. Unfortunately, the reality is that such returns aren’t realistic, and no innovation can generate them.
Mirror Trading International – Lessons to Be Learned
The South African firm and its owner, Cornelius Steynberg, persuaded unsuspecting investors to pool their investments in an account that is believed to have lost 29,421 bitcoins. A fictitious broker was invented to give the scheme an air of credibility, and multi-layered and fraudulent accounting kept the scheme apparently afloat long enough to lure in more new victims.
Mirror Trading International’s demise is once more a reminder for traders to use a trusted broker from this shortlist of firms that ForexFraud has reviewed and rated. Trading Bitcoin and other cryptocurrencies is almost guaranteed to be a bumpy ride. With prices reaching new lows, many will be tempted to come into the market to buy the dip. However, setting up an account with a legit broker is step number one towards safer crypto trading, no matter what ‘bots’ or returns are promised.
Crowdsourcing information about scam brokers can help others avoid falling into the traps set by disreputable brokers, and you can share your experiences here. If you would like to know more about this particular topic, or have been scammed by a fraudulent broker, you can also contact us at [email protected].
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