Plenty of people claim to have made money out of cryptocurrencies and I reckon plenty more may in the future. But the hype around Bitcoin and others has attracted rogues – and they’re hoping to trick you out of your cash.
Reader JB got in touch with a tale of woe after he was called out of the blue by a trader from a company called Coinbull. I would have thought the clue was in the name, but the people behind it – and those who sign up for it – obviously think of a strong bull market, rather than the other kind of bull.
What is Coinbull? It sets itself up as an online trading platform and claims to offer futures trading in a wide array of cryptocurrencies including Bitcoin, Dash, Ethereum, Litecoin and others.
It’s similar to a wide number of other sites that have recently sprung up – Coinbull appeared in 2017 – that offer to help you make money by profiting from the recent interest in cryptocurrencies. You don’t actually buy or sell these currencies but bet on their future movements.
Risky? You bet. But the risk is magnified by the fact that such sites aren’t even regulated. In fact, they appear to be moneymaking schemes for the people who set them up.
Back to JB, who told me: “The broker persuaded me to invest €1,000 in the cryptocurrency market platform.” He managed to “do some trades”, he said, and pretty soon he was sitting on what he thought was a profit. But then, as is always the case with dodgy opportunities, he discovered a problem.
“I found I couldn’t withdraw funds. I was disappointed and wanted to close the account, but the broker said that wasn’t allowed. It seemed to mean that I had to keep trading until all my money was lost.”
“The key advice is: don’t ever respond to a cold call or offer to make money”
Surely that can’t be right or fair? It’s not. But the fact that Coinbull and similar cryptocurrency sites are unregulated means they can effectively do what they like.
A little bit of digging reveals that the firm is based in Dominica, an island in the Caribbean far beyond the reach of UK lawmakers. Its address turns out to be a mailbox in a hotel on the island. When I called its number, I got the usual “Your call is important to us” message that companies use. But it obviously wasn’t that important, as after a short while it clicked through to the message: “Sorry, this mailbox is full.”
In other words, no one has ever bothered to listen to the messages from presumably anguished people trying desperately to get their cash back.
Things didn’t end there for reader JB, as the firm obviously thought it could squeeze more money out of him.
He told me: “The senior broker called me from New York today and tried to persuade me to invest more money. He evaded my questions on the true nature of the function of Coinbull.”
It has all the earmarks of a scam. I’m sorry JB has lost €1,000, but hopefully his experience will be a lesson to other readers.
The key advice is: don’t ever respond to a cold call or an unsolicited offer to make money. Legitimate regulated investment firms will never contact you out of the blue. It’s also worth checking the City watchdog’s register of regulated firms at Register.fca.org.uk to check the credentials of any investment firms you deal with.