How to avoid being conned by cryptocurrency brokers

I have received very intriguing responses from readers on cryptocurrency investing, some of which are worrying. These questions represent what many Kenyans are going through silently.

 I have outlined in one of my previous articles that cryptocurrency investing is a do-it-yourself investment that operates in an emerging exchange.

Cryptocurrency assets are projects that require deep analysis to see through their potential. They are not the equivalent of companies in the Nairobi Stock Exchange which are stable and whose performance is reasonably predictable.

 Visit www.coinGecko.org for the extensive list of cryptocurrencies in the market including those listed this morning. This exchange lists all the coins (projects) including their categories. Even if you are a beginner, you can proceed to the website of each coin (project) and learn about what they do and promise to deliver. You are then able to make sense of where your investment will make money from over the time of investment.

 Many people have been duped into projects said to be investing in oil exploration and have innocently put their money in them, when they cannot verify for themselves that such a project exists.

Whenever you are approached by anybody selling cryptocurrency, listen carefully and ask for the complete name of the project. Proceed to verify the existence of the project in www.coinGecko.org and take a look at the website of the project to clarify whether it is offering the same information as what was shared with you. This is the list you can use to start building knowledge in this growing market of investments.

 Primarily, cryptocurrencies have their own exchange in the US where regulatory activities are already in place. This product has not reached the maturity stage whereby it is universal with local exchanges.

Kenyans have been duped by local agents of trading houses based elsewhere in the US to think that there is a local brokerage dealing on their behalf. Unfortunately, it is Kenyans misleading Kenyans, so the lie can pass for truth undetected.

 There are investment houses in the US accepting your investment as a deposit, the equivalent of an investment bank deposit in Kenya. Their choice currency is Bitcoin, a cryptocurrency that has now gained global acceptance.

When you make such a deposit, all you have done is the equivalent of placing a deposit is USD or indeed any other currency.

The investment house will undertake regular investment in the US economy, not necessarily in the cryptocurrency market.

However, their portfolio may include some exposure on cryptocurrency projects. I can bet you something not more than 5 percent to 20 percent of their exposure.

 There are Kenyans who have placed money in such investments requiring deposits in Bitcoin as the currency.

They are sitting pretty thinking that they have investments in Bitcoins but will be shocked when they fail to make the good-looking investment proceeds they expected at maturity.

The truth is that you made a deposit just like you would have made with any broker in Nairobi who has chosen bitcoin as a currency. Your money is somewhere in a developing country in local exchange and not necessarily in a crypto project like bitcoin, binance, tether, solana or cardana.

 My best advice to you is to get firsthand training on cryptocurrencies at the basic level before engaging with any such outfits.

 Patrick Wameyo is a financial literacy coach at Financial Academy and Technologies, and an entrepreneurship coach at The Entrepreneurship Center EA. [email protected].