Crypto Basics Crypto Knowledge

How Bookkeeping Tools can Help to Protect you From Scams

The story is all too familiar: the hype surrounding a new crypto project turns to heartache when its founder suddenly disappears, along with investors’ money, amidst allegations of fraud.

In 2017, Dr Ruja Ignatova, the architect of the infamous One Coin scam, vanished after raising over USD $4billion. Before his untimely death, Gerald Cotten, stole over $250 million-dollars-worth of crypto by running one of Canada’s largest crypto exchanges as a ponzi scheme.

And just last week, Faruk Fatih Özer, the founder of the Thodex exchange, fled prosecution in Turkey, allegedly making off with USD $2 billion of investors’ funds in the process.

Turkish authorities have since launched an international manhunt for Özer, whose sudden disappearance, along with the arrest of 62 people in connection with Thodex, has left some 390,000 users fearing the worst. While Thodex continues to deny any wrongdoing investor funds remain irretrievable.

The incident brings home an uncomfortable truth: it’s still all too easy to fall victim to scams in the crypto space.

In 2020, scams were the highest grossing form of crypto-currency based crime, accounting for USD$2.7 billion in losses. This figure will be beaten in the first half of 2021 if allegations against Thodex are proven to be true and investors are unable to recover funds.

So what can you do as an investor to keep your funds safe from a fraudulent exchange?

Researching an exchange before you buy assets is always a good place to start. Check out whether it has been hacked in the past and, if so, find out whether users were compensated for lost funds.

Popular, centralised exchanges like Coinbase, Binance and Kraken are generally a safe bet as their security mechanisms are robust and users benefit from (some) insurance against losses.

Of course, it’s not always possible to use a centralised exchange if you want to invest in a niche coin or project. When it comes to trading on a decentralised exchange you enter at your own risk – in the second half of 2020, hacks and attacks on DeFi accounted for 50% of lost crypto funds.

That’s why it’s so important to use a book keeping tool, like to protect yourself against losses.

Whatever exchange you use, book keeping tools can be a lifesaver – if you lose money due to theft, fraud or an exchange going bankrupt having a record of transactions can help you to prove ownership of funds. For Thodex users, who are now locked out of their accounts, providing evidence of their losses will be vital for pursuing legal action. can also help you to generate an accurate tax report if an exchange loses your funds. If you can prove money has been illegally stolen it affects your tax bill so be sure to connect all your wallets or exchanges to your Accointing account to keep track of your holdings and losses.

Even the most experienced investors fall prey to sophisticated scammers so remember to do your due diligence, back-up your transactions and keep your house in order.

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