Cryptocurrency frauds to avoid in the UAE
The UAE is home to a rapidly-growing cryptocurrency industry, with various trading platforms now available. Unfortunately, some traders have been the victims of fraud, making it essential to be aware of common scams and how to avoid them. This article will discuss common frauds when trading cryptocurrencies in the UAE.
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Fake trading platforms
Many fraudulent sites posing as legitimate cryptocurrency exchanges exist in the UAE, promising attractive rates with little risk. However, these sites are often simply fronts for stealing funds or personal information from customers. To avoid falling victim to this scam, only trade on trusted exchanges and research any platform thoroughly before depositing funds.
Criminals also attempt to gain access to cryptocurrency wallets by sending emails or text messages disguised as the user’s exchange. These impersonations often request copies of private keys, passwords, or other sensitive information. To protect against this type of fraud, never click on links in unsolicited emails and be suspicious of any communication that requests personal details.
Fake initial coin offerings (ICOs)
Scams claiming to offer high returns from ICOs are also common in the UAE. Some even include fake celebrity endorsements and bogus investment advice. Before investing in an ICO, investigate the company thoroughly and only trust reputable sources for advice.
Pump-and-dump schemes involve fraudsters artificially inflating the price of a cryptocurrency by spreading misinformation and convincing traders to invest. The fraudsters then quickly ‘dump’ their shares, causing prices to plummet and leaving investors with little or no return. Knowing the signs of this type of scam is essential to avoid it.
Mining cryptocurrency requires significant computing power, making it difficult for individual users to mine effectively. As such, many miners turn to cloud-based mining services which use powerful hardware owned by third parties, charging fees in return for a share of the profits. Unfortunately, some providers are fraudulent, often taking money without providing any services in return. Always research cloud-mining services before investing money in them.
Cryptocurrency investment scams are also common in the UAE, with criminals often promising unrealistic returns within a short timeframe. To avoid falling victim to this type of fraud, never invest in a cryptocurrency without thoroughly researching it first and consider consulting with an expert.
Fake wallet providers
To store cryptocurrencies safely, users must create a digital wallet which securely stores their private keys and other information related to their holdings. Unfortunately, some fraudulent companies offer fake wallets disguised as legitimate services but do not protect users’ funds. Always research any wallet provider before downloading or investing money in them.
Pyramid schemes involve individuals recruiting others to join their network in exchange for a commission. This commission is often paid with cryptocurrency, and the scheme perpetuates itself by continually recruiting new members. Legitimate investment opportunities will provide more detailed information about their offering and should continuously be researched thoroughly before investing.
Ponzi schemes involve criminals promising high returns to investors within a short period, using money from later investors to pay earlier ones. These scams are common in the UAE and can result in significant losses. To avoid this fraud, always research potential investments carefully and trust reliable sources for advice.
Scammers posing as famous individuals or companies will sometimes offer large amounts of cryptocurrency for completing surveys or carrying out other tasks. With no real reward at the end, these offers are fake, and users should never follow links or provide any personal information.
Phishing attacks involve criminals sending fake emails, texts, or other communications to steal personal information such as private keys, passwords, or other sensitive data. To protect against this type of fraud, never click on links in unsolicited emails and be suspicious of any communication that requests personal details.
Market manipulation involves fraudsters artificially inflating or deflating the price of a cryptocurrency. It is done by placing large orders to influence prices and then taking advantage of the situation to profit. To avoid this scam, traders should conduct thorough research before investing in any asset and consider using reputable services for advice.