Forex scams

Scammers and fraudsters are found every where – from the real estate business and the stock market to dating sites, the art world and religious congregations. It is therefore no surprise at all that some scammers use forex trading, or the mere idea of forex trading, as a basis for their scams.

Here are two examples of how forex trading has been used by scammers. The more we know about possible scams, the easier it is for us to spot warning signs and stay clear of frauds.

I also recommend that you read the page about scams over at It is full of good tips about how to avoid financial scams.

The miraculously accurate predictions

scamsYou get a tip – the EUR will appreciate against the USD before the week is over. Stock up on EUR and then sell off when the Euro is up, and you will make a nice profit. You are reluctant to follow the advice, but you do watch the exchange rate and the tip turns out to be right. Now, the tipper contacts you again and give you a new tip. This time you actually buy some currency, and when the tipper turns out to be right, you make a little profit. The tipper contact you again, and this time he wants to you invest in a venture where he use his amazing ability to predict the FX market to make big bucks. Now you are excited. You’ve already made a profit, and you also understand that if you don’t invest, these lucrative tips will stop coming your way. You invest quite a bit of money, and only later do you realize that it is all a scam.

How does this scam work? It works because the scammer contacts a lot of people. Once upon a time, this scam was a phone scam, but today it will work just as well with emails, texting, social media PM:s, and other forms of individual contact.

Step 1: The scammer contacts a lot of people. Let’s say he’s using an email list and have 500 contacts on the list. He sends 250 people an email saying the Euro will appreciate against the USD before the week is over. The sends the rest of the list (also 250 people) an email saying the USD will appreciate against the Euro before the week is over. Now, there is of course the possibility of the exchange rate to not change at all, but this is not very likely. Much more likely is a scenario where either the Euro or the USD will appreciate against the other currency before the week is over.

Step 2: The Euro appreciated against the USD. The scammer takes the 250 people that got the correct prediction and contacts them again. Half of them get a prediction that says that the USD will appreciate against the CAD, half of them get a prediction that says that the CAD will appreciate against the USD.

Step 3: The CAD appreciated against the USD. The scammer now has a list of 125 people who have received two correct predictions. He can either divide the group again to once again prove his amazing ability to predict the FX market, or he can send out a message to all the 125 addresses where he gives the recipients the opportunity to invest in his money-making venture.

Step 4: The scammer invited 125 people to invest, and 30 people agreed. Each of them invested 1 000 USD with the scammer. The scammer now has 30 000 USD and the scam didn’t even cost him the cost of stamps. All he needed was a computer or smartphone with an internet connection.

Ponzi schemes

In a Ponzi scheme, the scammer is accepting money from new investors and use (all or part of ) it to give money to old investors, pretending that the money comes from a successful business venture. In many cases, the old investors are so happy with the return that they decide to invest more, and the scammer now has new money to use for payouts, and so on. Happy investors will talk about their successful investment and thus attract new people – and new money. A good Ponzi scheme can be kept spinning for quite a long time before it unravels, and the scammer can have plenty of time to siphon off funds and hide them in a safe place before the whole thing collapses.

fakeThe purported business venture can be almost anything, and claiming that the money comes from profitable FX trading is of course a possibility. One advantage of choosing FX trading as the focus of a ponzi scheme is that no props are necessary. The scammer doesn’t have to pretend that there is a factory somewhere producing goods or stage an office to make it look like he has a company that is offering some type of service to consumers.

The Ponzi scheme is named after Charles Ponzi who carried out this type of scheme in the 1920s. Despite being forever associated with this type of investor fraud, Mr Ponzi didn’t invent it – the basic idea of this scheme is much older. We can for instance read about this type of scam in the novel Martin Chuzzlewit by Charles Dickens, published in the mid 19th century.

Caution – these sites have a bad reputation

Below you will find a few examples of sites that have a bad reputation within the field of forex trading. Some of them are still active, while others have shut down. Since there is always the risk of a “sleeping” site to be rustled back to life again when the unwanted attention from authorities and anti-scam watchdogs have subsided, we have elected to include even non-active sites in our warning grid. Of course, if a site returns to life again it could also be because the site name has been dropped by the previous owner and purchased by a new entity, but caution is still warranted to make sure it is not just an administrative change of ownership to shake off bad publicity.

(Dunboyne Investment)


(Lloyds Capital Group, LLC)

(4 Squared Analytics)

(Forex Place)

( (

(Banc De Binary)


(Sunbird Trading Limited)

(Boston Trading & Research) ( ( (Trademarker)

(CDH Global)


(City Equities Ltd) (CRE Capital Corporation)




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