Scam Detection - Help!

Hi all,

This is my first post, and apologies for just barging in, but I’m not sure where else to turn to for some assistance. I will leave out or mask specific details for now, but I need help in confirming whether something is a scam.

I am a complete FX noob, and whatever jargon I have stated below is due to research rather than knowledge, which means I could use these terms in the wrong way.

Someone close to me (let’s call him Adam) has bought into a managed FX scheme. How it works is that he paid US30k to a company operating in a major European capital but registered in an offshore tax haven (you know, one of those tiny islands who sell bank accounts and passports). This company then provides Adam with MT4 login details so he can monitor the trades. Adam has the necessary account permissions to execute/manage trades, but is advised not to and to just “leave it to the pros”.

The account started with the $30k deposit and had an initial credit line of $1m (ostensibly coming from some European bank and arranged by the scheme), with the broker offering 1:200 leverage. Over the last few months, the line of credit has grown to a whopping $15m.

The trading goes well, with the firm seemingly making consistently profitable trades using a combination of FX and CFDs. There is no reason to suspect the trades themselves are bad - Adam has watched them being executed in real time, and they follow broader market movements, so the managers seem to know more or less what they’re doing. The FX trades are reasonably-sized (relative to available margin), but the derivate trades can be absolutely enourmous (position sizes can be over >$100m). This is all on his account alone.

His MT4 software reports that his account size has grown from $30k to over $3m in a just a few months, along with the full trade history as to how that happened, and all the numbers stack up.

Withdrawal is currently not possible under the scheme, but is promised within the “new few months”.

Adam is blinded by the numbers, but after talking to him and doing my own research, the problems I have with the whole thing are:

  1. Where on earth does the $15m credit come from? Ostensibly it is from some “foreign bank”. Adam never signed anything. And remember this is just for one client account.

  2. On the volume indicator in the MT4 software, it appears that the total volume traded on the entry/exit candles are LESS than the total position size on the derivatives trades. Can this be possible?

  3. Is it possible to market order nine-figure trades on popular derivatives without crazy slippage?

Arguments FOR this being legitimate:

  1. The trade decisions themselves, from what I can see, are well-timed and are profitable. No scam here.

  2. The person who introduced Adam to this scheme is a very trusted and conservative lady who has been reaping rewards from it after joining it herself a few years ago. They have a personal relationship that spans many years, Adam trusts her implicitly, and it is extremely unlikely that this lady is a fraud/liar.

  3. The MT4 software on desktop and mobile both indicates this is a live/real (and not a demo) account. I don’t know how much this means, and I suspect it’s easy to fake, but just mentioning it nontheless.

  4. It oocurs to me that if you really wanted to run a scam, you would not do it in such a way that generates such sick and totally unbelievable profits. You would grow the account at a good rate to keep investors happy, but not at the rate of 100x in 3 months! That’s just asking for investigation and further diligence. So perhaps there’s “too good to be true”, and then there’s “so ridiculously good it must be true”.

Over to you guys.

If this is a scam, does this story take on the pattern of similar well-worn stories? Is it possible that it is legitimate?

Adam’s position is that he went in with eyes wide open, is willing and can afford to lose the $30k, so takes a “well if it’s legit, it’ll be worth it” approach. This is fair enough, but still, every bone in my body is calling bull on this.

Any thoughts? Thanks for sticking with me thus far!

Sorry, further quick points (not sure if it matters):

  1. The scheme is sold as high-risk and any returns are NOT guaranteed.

  2. They take 50% of all profits as their cut (fair enough if they really are making millions…).

The only concrete facts in this scenario are that:

  1. your friend has parted with $30,000 of real cash

  2. he has donated it an organisation that is registered offshore and beyond normal market regulatory authorities

  3. he is not allowed to withdraw anything

Just about everything else about the trades in this story can be faked with little trouble.

I really am not sure why you are bringing this to a forum designed primarily for beginner forex traders, but the fact that you have suggests your own conclusion about this fantasy trading is the same as any one else’s here is going to be!

If someone really is “willing and can afford to lose the $30k”, and does not even bother to check out the legitimacy of the company they entrust it to, then lose it they probably will…

Regardless of whether this company comes within the jurisdiction of the regulatory authorities in that area, it may be worth checking with them whether this company is known.

The kind of fraud that you suspect here is a criminal offence and not just an avoidance of regulatory rules, but until your friend realises that he is not going to see his money again there is little that you can do…

Has Adam actually followed any of these trades in real time from the time they are initiated to their closure on a separate, independent price feed?

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Thanks for your response.

Apologies if this is not the appropriate forum for my query - but I am a beginner myself and this place is the only one I know for the time being.

I agree with you in principle. However he reliably knows of one other person who has been withdrawing funds (and has withdrawn many multiples of their initial deposit). Of course one person’s story is just that, but even though I am a skeptic at heart I don’t see this as being fake (it’s possible it’s just one big ponzi and Adam’s friend was early enough to not get stung).

Regarding the trades, I have followed them myself in real time and the entries and exits are legitimate and correspond to broader market activity. For instance some recent shorts were put on DJIA which were held through scary negative seven figure P/Ls, but were closed instead at seven figure profits (and the charts all correlate with actual market activity, and I watched the trades open and close in real time).

I am just doing some diligence on this because in my Googling I have not found any other scheme like this, so while instinctively I believe it to be false, there is enough of a smidge of reasonable doubt (call it greed) that makes me want to do more research.

Another interesting note is that the scheme only accepts deposits in that fixed amount, and you can only open one account per person. You cannot give them more or less than this amount, and they do not ask you for more money in future. They also jump through KYC/compliance hoops and not everyone who applies is accepted. The rules are unusual (red flag) but also counterintuitive to how you’d expect a scam to operate.

Anyway, thanks for your response. The research continues…

Your defence of this “scheme” is admirable despite your supposed doubts.

You are beginning to look more like the scam promoter yourself. Slowly drawing beginners’ attention to big rewards. First, through “doubts” over a dramatic claim of huge profits, followed by a gradual denial of any criticisms raised against it.

Clever? Maybe. But if anyone gets drawn into such a spider’s web of fantasy fiction with real money then their fate is their own - and they deserve it.

Your descriptions and supposed concern for your friend to the extent that you monitor his trades are about as credible as the unicorns in my back yard.

If you really are genine then take your concerns to the authorities concerned, not here…

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Your concerns on my legitimacy are absolutely appropriate, and I would think the same. I welcome the mods here to shut down my account or ban permanent messaging - I will certainly NOT in any PM or any message here give away the name of the scheme. I have given nothing away anyway so that even would-be prospectors cannot figure out the name of the scheme, as I won’t be held responsible in the event of scam.

Anyone on the internet can say anything, so take this with the little pinch of salt that you will, but nothing above is false and my position is absolutely as described. The only difference is that Adam is me (not my real name of course), and I’m trying to determine how elated I should be, because these kind of numbers do not sound at all possible.

Of course I am silly to have invested that much on the surface of it, but it is part of a wider basket of investments and is part of my “hey you never know” pile. Some of that pile went into BTC some years ago, and that worked out okay, so hey, you never know.

I appreciate your responses. If there’s any concerns at all on my incredible fabrication, I will stop right here. In a year or two, when I have some solid proof of how things have transpired (more than likely in a big joke where I am the fool!), I will come back and clear the air.

In the mean time, happy trading folks, I really mean nothing sinister by any of this!

That much was obvious from the beginning!

I have expressed my skepticism, both on this tale and on the exotic returns from that business itself, and I have nothing more to add…

…except to mention that I have flagged this thread to the site moderators to monitor how it develops - just in case! :slight_smile:

That’s fine, and I welcome the monitoring.

The whole point of the thread was that it is my belief that most forex scams have to be pretty well-worn, because why come up with something new and clever when there are plenty of new gullible fools to cheat. So I was wondering whether this shared the pattern of an FX Scam 101 that I have yet to read about.

If anyone has, please let me know. Otherwise I will let this die a natural death, and (legitimately!) share the eventual conclusion to this saga much later.

Another one of the “get rich quick” schemes…
If your story is true and not fan fic like Manxx said, and I am correct in my evaluation - you can expect your friend to be asked to deposit some initial money in order to fill a requirement.
Or they will let him withdraw some of it, then ask for more.
This can happen as many times as they feel is safe (before he starts asking questions or asks to withdraw all)
and then they will disappear or his account will crash and burn all of a sudden.
That’s about it.

Hmm that sounds like a new kind of scam. @ApplyPippy why don’t they let you make any withdrawals? This is a huge red flag. And this rule for a fixed deposit, not more and not less, this is very strange as well. Did they tell you when you can withdraw your funds? I highly doubt that this broker will allow you to withdraw the million dollar balance but you could at least try to return your investment back.

@sebastiano Withdrawals for me are promised for Feb-Mar 2019. Someone else I know (a different person from the one I mentioned in the first post) is also in on the scheme - he/she got in earlier and apparently will be able to withdraw at the end of the month. Withdrawal is apparently by way of a debit card, which is interesting. Withdrawal limits will be low at first, but will ramp up over time (they are seemingly doing some infrastructure work at the moment on their “technology platform” and will be rolling it out in stages - yes, what the heck?!).

I’ve kept doing more due diligence, and many hours of research later, some things still don’t add up (source of credit?) but others do (MT4 server looks legit - same white label server used by at least one other established FX broker), so am still not sure what to think. Biggest red flag is of course the whole “get rich quick” nature of it.

One thing is for sure, we will not be putting any more money in (at this rate of growth - whether real or not - there’s simply no need to!), and I completely agree that as long as we can withdraw our initial deposit, everything else is a bonus.

I don’t want to go into too much depth etc (I don’t want to do anything to promote the idea that I am a scammer). Will update as soon as my contact is able to withdraw, and/or will update months later when I have a better feel for what the truth is (both at the risk of being labelled a scammer!).

More to come. :slight_smile:

@ApplyPippy We never got to hear how all this transpired? Were you able to withdraw your $3m or did you end up loosing your $30k?