Ethtrade Review – Is Ethtrade a Scam or Legitimate? Read Before You Invest
You probably heard about Ethtrade through a friend or family member. You could have also seen an advertisement via one of the many social media platforms. Either way, you want to know whether Ethtrade is a scam or a legitimate Ethereum trading platform. Almost everyone thought Ethtrade is a legitimate company, it is not. Read this unbiased review before you invest.
What is Ethtrade?
Ethtrade was founded in August 2015 by Eric Bondi and Michael Frendowski. The online trading platform (ethtrade.org) was launched in April 2016 and Ethtrade Limited (2398217) was then registered in July 2016 in Hong Kong.
Ethtrade is a classic Ponzi scheme that claims itself a trading company that deals with Ethereum and promise its investors up to 25% return on a monthly basis. The Return On Investment (ROI) does sound attractive for passive income.
Unfortunately, if you think it is a legitimate trading company, it is not true.
Ethtrade disguises as an investment company. From the official website, one can notice it is a High Yield Investment Program (HYIP) scam that aims to steal your hard earned money. Why? There are a few red flags I managed to pick up.
Ethtrade Review – Is Ethtrade a Scam or Legitimate?
#Red Flag 1 – New Site and Unknown Identity
The first red flag is the fact that Ethtrade is unwilling to share any basic company background with you. Their domain was registered in February 2016 and domain whois showed the setting is private but the website itself is registered in Nassau, Bahamas.
The registrant’s name doesn’t show up. I have tried to search for the person who is running the scene on the internet and nothing appears. This is a clear warning that the scammer does not want to reveal his or her real identity to avoid detection.
If a company is not upfront and willing share basic information about the company, then it is either a scam or not worth your time and money.
#Red Flag 2 – Vague Investment Information
Obviously, there is a lack of details on how Ethtrade manages the money from the investors such as underlying insights, strategies, goals and techniques. Ethtrade tends to be vague about the strategies used in their program.
Moreover, they have given incorrect information about what Ethereum is and its benefits.
Most importantly, given that Ethtrade is an Investment Service, it should be regulated by the Securities and Futures Commission (SFC) of Hong Kong. There is, however, no record of the company in the public register.
This is your hard earned money, please do not be afraid to ask questions. A genuine financial professional will usually be happy to explain in detail the investment program they are marketing. Unfortunately, Ethtrade fails to do so.
#Red Flag 3 – High, Unsustainable 25% ROI
I have years of experience in investments. Historically, investments in most large corporate stocks return less than 10% per year. Usually, HYIP scams offer between 1 percent to 2 percent daily profits to its members.
The Ethtrade discloses their investment plans with no aim to hide its absurd and unsustainable returns. The provided calculator shows how it earns you a 25% ROI on monthly basis. To me, it is a total nonsense.
The funny thing is the investment plan returns a perfectly steady positive income percentage regardless of any external variable such as price volatility. Don’t you think this sounds a little fishy?
The ROIs that they claim on the official page clearly indicate that the investment is actually a Ponzi scheme or a junk bond that may never increase in value and has a high rate of default.
#Red Flag 4 – Removal of Partners’ Logos
In June 2016, ethtrade.org used to have logos of ConsenSys, Maker, Slock.it, Digix and EtherParty at the bottom of their home page. All of these companies have then requested them to take down the logos as they have never worked with Ethtrade.
#Red Flag 5 – Sign of Ponzi
Ethtrade offers offer referral commission program that looks really fancy. It is a good way to make extra money. I understand that most investment companies offer affiliate programs, but by looking at what they are offering, it does look like the entire “trading” system is sustained by it’s Ponzi scheme.
For a real investment company, this would equal giving away the entire (if not more) profit margin. This is a typical trick from most of the HYIP on the market. They offer to reward “referral fees” to investors for bringing in additional members.
That’s how a Ponzi scheme is operated. They recruit new members to sustain the pyramid scheme. They need “new” money to generate “returns” for the older investors by acquiring new investors.
It is a fraudulent investment scheme where they pay returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.
It is a pyramid scheme that typically collapses in the end because it requires exponential increases in participants to sustain the business model. That simply means the scheme cannot go on forever.
Ethtrade probably still pays their investors for now as the program is still relatively new on the market. When there is insufficient investment fund from the new recruitment to the older investors, the entire structure will collapse.
I am not a fan of these HYIP programs. It is very rare that I recommend them because there are some things you need to know before you dive into this and throwing your hard earned money around.
Every investment carries some degree of risk, which is reflected in the rate of return you can expect to receive. If your money is perfectly safe, you’ll most likely get a low return. High returns entail high risks, possibly including a total loss on the investments.
Fraudsters like Ethtrade spends a lot of time trying to convince people that extremely high returns are “guaranteed” or “can’t miss.” They try to plant an image in your head of what your life will be like when you are rich.
Don’t ever believe it.
Based on my observation, it is very clear that Ethtrade is an investment scam.
Ethtrade works pretty similar to Forex Paradise, where the company claimed it was registered in Hong Kong and survived for three years. Many victims lost their hard earned money in October 2016 when they disappeared of all sudden.
Why do people keep joining HYIPs knowing that they are Ponzi schemes?
All these Ponzi Schemes aim at people who want to get rich quick and do not want to take the tried & tested route of – hard work = success.
Most people want to make lots of money quickly and the legal options are often very limited (e.g. Lottery). When a product promises to give you exorbitant returns, people tend to believe it due to our greed.
However, most of the people end up losing their savings and hard-earned money.
I wrote an article on How to Invest Online Without Being Scammed. This should serve as a reference when you look for a legitimate investment company on the internet.
I don’t like the reliance on Ponzi scheme in order to make bad money. I do not believe in HYIP because they are too risky and most of them are not legitimate.
If you really want to make some investment, you could possibly look into legitimate companies such as Genesis Mining. It is a company that sells mining contracts for Bitcoin and other cryptocurrency.
Their main operation is in Iceland where they provide an easy and safe way to invest in their mining facilities. In return, you get a certain percentage of mined cryptocurrency daily.