Beware of fake cryptocurrencies doing rounds on social media

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Hina Maheshwari, 32, received a WhatsApp message from her friend asking her to be a member of a crypto currency scheme,  which was giving free digital currency like Bitcoin. She was asked to share her mobile number to complete the registration process.  Given the huge jump in Bitcoin prices, the message immediately caught her attention.

Riding on the popularity of Bitcoin there are plenty of such schemes, which are doing rounds on social media. These schemes promises high guaranteed returns and generally ask you to add members to your network. As the downline grows commission is paid on the business brought in.

Bitcoin is the oldest cryptocurrency which gets exchanged on peer to peer basis. The currency has given a return of around 488% over the last one year and since the beginning of 2021 the virtual currency has given 91% return within two months. Experts say cryptocurrencies are highly volatile and therefore guaranteed returns from Bitcoin are impossible. What are these scammers and fraudsters therefore trying to get from people?

Avinash Shekhar, CFO of ZebPay, says, “As in traditional finance or new finance, if someone offers fixed returns, especially higher fixed returns, it is most probably a fraud. Bitcoin mining is like any other business where you have to invest capital and labour to generate returns. You can incur both profits and losses depending on the Bitcoin prices and other factors. It’s a business where you take some risk and you get some reward based on that risk. So, guaranteed return is obviously not possible.”

He adds, “Typically, these scammers approach an investor promising them 25% return. They ask investors to pay a certain amount of money and then run away with it because the kind of returns they promise are not possible. Most scammers are looking for a way to make easy money.”

Bitcoin has touched $1 trillion market capitalisation recently putting it above Facebook, Tesla, and Alibaba and moving close to Google, Amazon, and Apple. Considering it’s a peer-to-peer transaction with no intermediary involved, the Cryptocurrency Bill scheduled to be tabled in Parliament, may provide for banning of private cryptocurrencies. Experts say the bill will bring clarity on the status of cryptocurrencies in India, which are currently not illegal but at the same time not recognised by the law.