The crypto space can seem like a wild west of unregulated and unlicensed companies, scammers, hucksters and other opportunists. As Bitcoin is still relatively new, there are a lot of widespread misunderstandings. Many people see it as a get rich scheme, without considering the underlying technology or purpose. Scammers exploit this confusion, giving the entire crypto industry a bad name.
The result is that some people regard any company involved in cryptocurrencies with suspicion. The word ‘scam’ gets thrown around a lot, often without consideration of what it means. It can be easy to lose sight of who out there is offering a genuine, safe and secure opportunity and who are the fly-by-night cowboys out to take your money, spin you around and shove you straight back out the door.
So what actually is a scam? The Cambridge dictionary defines it as ‘an illegal plan for making money, especially one that involves tricking people.’ Businessdictionary.com gives a more detailed definition: a scam is ‘a fraudulent scheme performed by a dishonest individual, group or company in an attempt to obtain money or something else of value.’
Overusing the word distracts from its seriousness and makes it harder to spot genuine scams. Some crypto companies are set up purely to steal from their customers with no intention of ever providing a useful service. Others, like Wirex, are fully regulated and secure, with the goal of providing a valuable, long-term service. There are always going to be mistakes and misunderstandings on both sides. But that shouldn’t discredit the overall purpose.
If you’re sceptical about how credible Wirex is, we don’t blame you. With so many scams around, who wouldn’t be? So we want to show you some of the ways you can tell if a company is genuine or not – while also giving you some more information about Wirex.
Here are the questions you should ask yourself before you hand over a penny to a crypto company.
Is the company registered with the right authorities?
Any financial company operating in the UK needs to be registered with the Financial Conduct Authority (FCA.) It’s not optional.
But some authorities will list just about any company that pays for their approval, so you might be wondering what this actually means for you. Does the FCA protect you from scams or is it just a meaningless piece of paperwork?
The FCA is in charge of regulating financial companies and markets in the UK. Their goal is to prevent financial crimes and protect customers. If a company violates the FCA’s rules, they face heavy fines and potential prison sentences.
You can even check out recent fines and sanctions they’ve imposed on the news section of their website. For example, one credit card company was recently ordered to pay nearly £169 million in compensation and fines of almost £2 million after they charged customers a hidden fee.
From this, it’s clear that the FCA can and do take serious action against scammers. They’ll even ban dodgy individuals from ever working in finance again.
To get on the FCA register, a company needs to provide a lot of information – business documents, earnings projections, funding details, a plan for preventing money laundering, a detailed business plan and more.
The business plan needs to tell the FCA exactly what the company plans to do, how and why. This includes details of how they plan to generate leads, their full range of services, fees and how they will be explained, and a long-term strategy.
Anyone with significant control of the company also needs to provide identification documents, residential addresses for the past 3 years, employment history for the past 5 years and any other details deemed relevant, such as copies of qualifications. So, it’s pretty clear that FCA registration is the #1 sign a company is credible.
You can find Wirex on the FCA register as an EMD agent (Electronic Money Services Directive) and you can read the full application requirements here, should you wish.
Does the company have public contact details and other key information?
A legitimate company will almost always include, at the very least, the address of its head office on its website.You should also be able to find the address on the UK government’s website, at the bottom of marketing emails and on documents such as terms & conditions. The government website is also likely to list the names of people with significant control of the company and filed documents (such as annual returns).
You can find Wirex’s head office simply by searching on Google maps or on the UK government’s website, showing that Wirex is registered as a financial intermediary.
It goes without saying that a legitimate company will always have a way of contacting them by email, a messaging service or by phone.
Another useful sign is whether the email address has a custom domain or not. When you contact Wirex, our email addresses end with ‘@wirexapp.com’ and not with a free domain like ‘@gmail.com’ or ‘@yahoo.com.’ Although this is a small detail, it can be a red flag. Scam companies use throwaway email addresses with free domains so they can delete the account once they disappear with your money.
Custom email domains are considered more professional and show that the company isn’t cutting corners.
Who’s in charge?
A company is only as good as its team. Even if the website doesn’t list the name and favourite dog breed of every single person who works for them, you should at least be able to find out who is in charge and find employees on sites like LinkedIn.
If you search the company name on LinkedIn, who comes up? Do they have filled out profiles with pictures and connections? Do they seem to have relevant experience for their role? Looking elsewhere, are they showing their expertise – perhaps by writing blog posts or giving interviews? Are they engaging in discussions and replying to people?
No one wants to tarnish their reputation by working for a scam company so if you can’t find this kind of information, that could be another cause for concern.
How long has the company been around?
Scam companies don’t hang around for long. While most crypto companies are still relatively new, it is safest to go with those that have been in operation without problems for years, not months. Of course, the Mt Gox scandal showed that this isn’t certain, but it is still worth taking into account. It takes time to get everything right.
As you can see on the UK government website, Wirex incorporated in 2014. Four years would be pretty young in many industries, but remember that Bitcoin has only been around since 2009.
While there are lots of other factors you can look at, these four signs are big indicators of credibility.
If you have been scammed, you should always report it to Action Fraud UK, using the contact form on their website or by phone. Action Fraud will then send your report to the National Fraud Intelligence Bureau, who work with the London police to investigate financial crimes. You’ll receive updates on the progress and outcome of the investigation. This is far more effective than writing forum posts about it and will help prevent the same thing happening to other people.