BaFin Releases Three-Page Guide Against Online Trading Scams

The German regulator said that scammers generally offer CFDs, binary options and cryptocurrencies.

It’s Tuesday, and that means another regulator has issued a warning against trading with retail brokers of some description. On this occasion, the notice comes from the Federal Financial Supervisory Authority (BaFin).

Usually, warnings posted online by regulators pertain to specific firms – see here, here or here for example – but the one that BaFin posted this Tuesday is much broader in its scope.

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Appropriately titled “Warning About Rip-Off Investments on the Internet,” the German regulator issued a three-page document that is effectively a guide on how to avoid getting scammed by brokers.

BaFin: scammers love binary options, CFDs and crypto

By way of introducing the topic, BaFin noted that most fraudsters deal in three products; binary options, cryptocurrencies or contracts-for-difference (CFDs).

The regulator then noted that people working for scam brokers would cold call traders and try to lure them into trading by promising them mouth-watering returns.

But, as BaFin then pointed out, and here I will use an exact translation from the original German because it’s both funny and completely true, “how exactly the investment works, explains the online [broker] on its website, however, not.”

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Much of this will be old news to our readers, but a couple of other points raised by BaFin were interesting.

For instance, the regulator noted that a lot of the time, platforms used by these brokers don’t match what is happening in the market. Victims are shown a fake platform where they are making loads of money but, in reality, their cash has just been stolen.

A real-life example of this came a few months ago in London. Police arrested a binary options scammer who took all client deposits and withdrew them in cash. At the same time, clients who logged on to their ‘platform’ got the impression that they were about to hit the big time.


Also interesting in BaFin’s documents are a couple of points made about what happens after someone has been scammed. The regulator noted that scammers would sell data to one another and even target the same people again, knowing them to be particularly susceptible to manipulation.

Finally, and as Finance Magnates reported several months ago, BaFin said that many scammers now act as ‘recovery experts,’ who ‘help’ to get back stolen funds for clients.

All in all, it’s a very cogent document and is must-read material for anyone that’s been getting late-night calls from Vanuatu. “Prost to BaFin!” Says this author.


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