*Regulatory authorities are warning consumers that scammers as the allure of quick profits has drawn millions to cryptocurrency trading, with many new investors joining the market daily

Alexander Davis | ConsumerConnect

Just as it is usually said that one should not rely solely on social media for credible news, consumers are also advised against taking investment advice from someone posting, especially on Facebook and Instagram respectively.

ConsumerConnect learnt the authorities are warning consumers that scammers are using these platforms to ensnare victims.

Cryprocurrencies

According to them, the scheme first hooks victims by helping them to realise actual profits, a move that builds credibility and earns trust with time.

However, once the victim has earned some cash, the scammers encourage them to transfer the money to a fake trading platform.

In reality, it is a bank account controlled by the scammers, who steal the money, agency report noted.

The scam is reported to have popped up in Florida, United States (US) within a large population of retired people.

Florida Attorney-General Ashley Moody says her office has received about 100 complaints in the last month.

Moody said: “The allure of quick profits has drawn millions to cryptocurrency trading, with many new investors joining the market daily.

“Where there is opportunity though, there are also scammers, baiting victims with early success, then prompting them to transfer their profits to fraudulent trading platforms.”

Victims get scammed after making some money

The Florida Attorney-General further disclosed the investigators are seeing a sharp uptick in complaints that coincide with recent gains in cryptocurrency, such as Bitcoin.

According to him, it is important for people to understand how these criminals operate.

After a victim clicks on an advert promoting investments in a cryptocurrency Web site, they are prompted to set up an account with a legitimate cryptocurrency exchange.

After they have made some money on trades, the victims are told to transfer their profits to other cryptocurrency websites that are fraudulent, imposter platforms.

These fraudulent Web sites may only operate for a short time, and then, the victims are blocked from signing in.

They are also blocked from contacting any financial or investment planner they were paired with earlier on in the process.

Seek advice from trusted sources

Moody, therefore, says there are simple ways to avoid these scams, including the following:

Always be wary of unsolicited offers to invest.

Know that if scammers request payment in cryptocurrency for the right to recruit others into a programme and promise rewards paid in cryptocurrency, it is a scam.

Be wary of fake cryptocurrency trading platforms that may resemble legitimate ones.

Finally, do some independent research before investing—never wire money or provide personal or financial information until properly researching a platform and an opportunity.

If you are new to investing, seek the advice of someone you trust. If you open a trading account at one of the major platforms like Etrade, TD Ameritrade, or Schwab, you will find plenty of research tools.

Most companies have advisers who can answer your questions.

Michael, of Tulsa, Oklahoma, wrote in a recent ConsumerAffairs review of Schwab, that “trades have no or small fees.

“You can build your own portfolio or use an advisor and let them do all the work for you based on your final goals.”