Fake exchanges and exchangers

In continuation of our column describing various fraud schemes in blockchain, we want to tell you one of the most popular cases. Namely about fake exchanges and exchangers.
Every participant in the cryptocurrency market, whether a beginner or an experienced user, inevitably faces a choice of platforms for exchanging or trading cryptocurrency. In the digital asset world, these platforms are known as VASPs (Virtual Asset Service Providers), including crypto exchanges and cryptocurrency exchanges.

The Financial Action Task Force (FATF) defines a VASP as any organization or individual that offers services for the exchange, sale or transfer of virtual assets (VA), and provides tools for their management. Essentially, these platforms allow you to transact with cryptocurrencies, including buying, selling and storing them.
Prerequisites for the emergence of the scheme
Fraudsters actively exploit the inexperience and insufficient knowledge of new cryptocurrency users. Taking advantage of their desire to buy or sell cryptocurrency, attackers develop their own pseudo-crypto exchanges and exchangers.
How the scam works
Attackers create fake websites of crypto exchanges or exchangers with attractive designs and fake legal references from companies. Sometimes these are non-existent companies, sometimes other people's real ones. Often these sites will claim that they follow AML (anti-money laundering) procedures, giving the appearance of legitimacy. Fraudsters can also create fake positive reviews and actively advertise their sites on social networks, on forums and in thematic groups (more about it in this article).

If you go into the office of such an "exchange"

Signs of fraud and how to avoid it
Users should be wary of attractive exchange rates and offers that seem too good to be true.

If there are any signs of suspicious activity, such as requests to deposit additional funds to “unlock” amounts already deposited or pay taxes, you should immediately stop all transactions.

Here are the real statements of the attackers we encountered during the investigation and return of stolen crypto assets:
Your cryptocurrency is dirty, so you need to go through an extended KYC procedure and make an additional security deposit, which will be returned after verification.
During the exchange, income arose on which it is necessary to pay tax.
You entered the withdrawal amount incorrectly, so it is blocked. A mirror transaction of the same amount is required.
You did not deposit a native token to pay the commission, so the entire amount is blocked. You need to pay an additional amount to pay the commission and the mirror transaction.
Often, attackers are well versed in psychology. They offer you two solutions, knowing that one of them will definitely not suit you:

“You have two options to solve the problem:
Make a mirror transaction for exactly the same amount.
Wait for funds to be unlocked from 60 to 120 days.”
Fraudsters will actively rush you, setting short deadlines for making a decision.

“You have 24 hours to make a mirror transaction, otherwise your original payment will be forfeited.”
Normal exchanges and crypto exchangers will NEVER forgive you for depositing more money to unlock previously deposited funds. All additional “investments” will only increase your losses.
Precautionary measures
Study reviews about the stock exchange or exchanger on the Internet.
Check the locationthe exchange in at least several well-known and reputable portals - cryptocurrency aggregators, news publications, etc.
Example of interface of the fraudulent site

Agree, it looks good enough to make it seem that all this is reliable.
Actions in case of fraud
If you are a victim of such fraud, it is important to:
Don't send any more money. Under no circumstances!
Take screenshots of all correspondence and save evidence.
Do not inform scammers about your suspicions and seek help from specialists.
Structure information about the incident and contact law enforcement agencies.
If you need a professional report with evidence, please contact us.
Fill out a brief with the blockchain addresses of scammers to blacklist them and allow them to be blocked on exchanges.
What NOT to do:
Pay to scammers, hoping for a refund.
Threaten the intruders and say that you will find them.
Ask for the money back out of pity, since these are your last or credit.
To avoid such crypto fraud schemes, you should be extremely careful and not trust promises of quick money. Never invest money in untested projects and do not trust your funds to strangers or companies.

Before investing in projects or purchasing cryptocurrency, conduct the analysis available to you or contact specialists.

It is also necessary to check the risks associated with your counterparties in the blockchain and scoring crypto assets. The question "how to check high risk in cryptocurrency" is answered by special aml services such as our Btrace. Crypto address AML* check in our solution will take only 3 seconds, but will save you from many risks.

*AML check crypto is analyzing the sources of funds flowing to a crypto address and estimating the risk-score. Risk-score is a percentage risk score ranging from 0 to 100. It takes into account the cryptocurrency address's receipt history, the likelihood of its association with illegal activity, user behavioral patterns, and available information about the address itself, its associated clusters, and the owner.

Simple steps and a little of your time will save your money and nerves! What to do if you do become a victim of crypto fraud (we hope not) read here.
Just Try Btrace
Check it out for free — we will give you a unique opportunity to look at cryptocurrency wallets through the eyes of an exchange compliance manager and see how our service works in practice.



We also recommend