Beware! KontoFX is an offshore broker! Your investment may be at risk.
Don’t put all your eggs in one basket. Open trading accounts with at least two brokers.
KontoFX belongs to a new group of brokers that only offer trading in Contracts-for-Difference on cryptocurrencies, as the latter have lately become very popular recently. Note that clients of such brokers do not actually buy nor sell any coins, but are only speculatively trading on the movement of their prices.
Like most such venues, KontoFX also uses a proprietary web-based platform instead of professional forex and CFD trading software like MT4 or MT5. It says it offers leverage up to 1:200, but on the platform we saw only a ratio of 1:1. In fact, the offer of this broker is somewhat unclear.
Actually, KontoFX offers trading in a number of crypto CFD against Tether (which they express as TTR instead of USDT for some reason). Despite promising low spreads, we saw a spread of around 170 USD on BTC/TTR, which is a very high value. The average in the sector is around 50 USD.
KontoFX Regulation & Safety of Funds
When it comes to the company behind the KontoFX brand, things get complicated. The broker’s website mentions a couple of firms: Transformatic Markets OU, based in Tallinn, Estonia, ООО «САМДАР», based in Moscow, Russia, and there is another address in Bucharest, Romania. There are no claims of regulation and obviously none of these companies is licensed in any country, which raises a serious red flag.
Besides, the Russian company is not unknown to us – ООО «САМДАР» operates another brand which we reviewed – Cryptop Market.
We advise our readers to avoid unregulated brokers, as most of them turn out to be scams. There are a number of reliable brokers licensed by well-respected financial watchdogs, such as the Financial Conduct Authority (FCA) in the UK, the Australian Securities and Investments Commission (ASIC) or the Cyprus Securities and Exchange Commission (CySEC).
KontoFX deposit/withdrawal methods and fees
The minimum amount required from newly-signed clients of KontoFX is 250 EUR/GBP. For wire transfers, however the minimum investment for deposit is 3 000 EUR/GBP. What is worse, according to the broker’s Deposit and Withdrawal policy, its clients cannot withdraw any amount less than 3 000 EUR/GBP.
We also spotted another alarming paragraph in KontoFX’s Terms and Conditions, according to which clients’ profits are subject to special conditions and cannot be withdrawn immediately:
How does the scam work?
Investment scam may come in a number of intricate ways, but one of the usual fraud schemes is as follows.
You come across a professionally edited video ad in the Internet or even on TV. The video tells a story about common people like you, who are rolling in money after trading the forex or crypto markets. After you watch the video, you will be urged you to fill a registration form, leaving your phone and e-mail. Not long after that than you will receive a phone call from an expertly sounding “account manager” who will promise you high returns and talk you into depositing a relatively small amount of money (say, $200) in some sort of investment company.
At first, usually, trades go well and investors are soon pushed to deposit more and hit it real big. Then, they will be contacted by a senior scammer, presenting him/herself as a senior financial adviser or a senior account manager. Keep in mind that each of the scammers contacting potential victims gets a percentage of each deposit. The Sales departments of brokers who first get in touch with clients get around 50% of the money invested, and then the “Retention” employees who persuade victims to deposit more get a commission amounting to around 10% of the deposited funds.
Many decide to invest more and then their trades usually start turning red. At some point, victims will want to close their account and withdraw what is left and here is the time when the “recovery” team steps in. Their task is to persuade victims into waiting six months or more so that the term within which they can file a chargeback with the bank expires.
What to do if scammed?
If you fall victim to a scam the first thing to do is to file for a charge back with your credit card company or your bank.
Also, if you have provided the scammers with any financial (banking) information or you have allowed them to access your computer via Team Viewer, block your credit card ASAP and change the password for your online banking service.
Finally, don’t trust the so called “Recovery Agencies”. It is possible that these contact you, offering help to recover your loss, but in fact they are running another scam. They will simply make you pay them upfront and then disappear with your money.