Beware! MegaCoinFX is an offshore broker! Your investment may be at risk.
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MegaCoinFX is a CFD brokerage which emphasizes on crypto currency trading and we believe is based in Bulgaria. It provides а web-based trading platform, not the the MetaTrader 4 platform. Clients have a wide range of currency pairs available, as well as Forex currency pairs with a favorable spread of 0.9 pips on EUR/USD. The required minimum deposit, however, is quite high at $2500 and a disadvantage for traders.
MegaCoinFX regulation & safety of funds
Reading through the terms and conditions of the brokerage we discern that the website is actually operated by a Bulgarian company . We remind readers that Bulgaria a member-state of the European Union and online Forex trading is duly integrated within its regulatory framework which is modeled after the ESMA guidelines.
However, we find no mention of a license by the Bulgarian authorities – thus we may safely conclude that the brokerage MegaCoinFX does not fall under any regulatory oversight whatsoever. We have encountered several “crypto” brokerages operating out of Bulgaria without a license and we have reason to suspect the same company is behind them all. Companies in the scamming business usually operate in such a manner spawning new websites weekly in order to evade being exposed by regulatory agencies and reviewers alike. However, the brokerage does inform us about its trading conditions and it provides a web-based trading platform. Through a demo account we could get a sneak peak at the web-based trading platform the brokerage provides.
Besides the wide range of crypto CFD options there are Forex trading products as well. As you can see – the spread on EUR/USD is 0.9 pips which is quite favorable, especially compared to the industry average of 1.5 pips. However, we always view the lack of MetaTrader 4 as a serious disadvantage. The MT4 is among the foremost trading terminals in Forex trading at the moment, close to 80 percent of users prefer it. The platform provides an advanced charting package, lots of technical indicators, extensive back-testing environment and a variety of Expert Advisors (EAs). Beginner traders will also find the trading platform easy to use as well, due to its user-friendly lay out.
There also isn’t much information on the website of the brokerage which is another warning sign that the broker is not at all legitimate and trustworthy. In fact – the lack of regulation and pertinent information incline us to suspect that potential clients of the brokerage may be exposed to substantial risk.
Traders needn’t have to worry themselves with such risk if they choose to trade with a brokerage regulated and authorized by a prestigious regulatory agency. Such agencies are the FCA in the UK or CySec in Cyprus which have been leading names in Forex trading for some time now. Their regulatory framework is composed of a number of strict rules which prevent clients from falling victims to fraud. Such rules include the segregation of accounts which assures that commingling with the client’s money is not possible. Furthermore, a license by such a regulatory body entails participation in a financial mechanism by which clients may be compensated if they suffer losses due to fraud or bankruptcy. With the FCA the compensation is up to 85 000 pounds, where as with CySEC it is up to 20 000 euro per person.
MegaCoinFX deposit/withdrawal methods and fees
We also find no information regarding the available payment methods for clients which is quite disconcerting since such information is crucial in Forex trading and we consider it yet another sign that this brokerage means trouble. Going through the terms and conditions of the brokerage we did come upon provisions which are worth noting. Here is a screenshot:
It appears the brokerage seeks to make money through an amalgam of fees. Perhaps that is the reason for the extremely high minimum deposit of $2500. We first read that there is a management fee of 3.25 percent every six months which is quite uncommon in Forex trading. Furthermore, there is a quarterly trading commission of 3.5 percent of the trading volume for the quarter and a staggering 25 percent withdrawal fee for “early withdrawals”. Nowhere is it specified what exactly an “early withdrawal” means but such a high fee only speaks about the ill-minded intentions of the brokerage. On top of all this there is also a non-trading service fee of 17.5 percent for all withdrawals without trading. Brokers in Forex do charge dormant acccount fees in order to force clients to incur trading volume, however, such fees are beyond excessive and should not figure in the terms and conditions of a legitimate firm.
Be However, dealing with unregulated brokerage we may never be sure whether they wont charge unexpected fees once the clients have deposited their funds. This is why we advise traders to always put up only the required minimum deposit, instead of risking a bigger amount with no certainty. Afterwards, they may also try to withdraw a small amount in order to check for any unexpected fees or delays. Such fees and delays are usually the signs of a scammer.
How does the scam work?
Even though the forex trading world is extremely large and encompasses millions of people around the globe, the most common scamming is pretty simple and straightforward and as such – it’s not particularly daring to avoid. Here is a quick overview of how it is done:
Through clicking an ad with promises for fast money, you will be redirected to a website such as Bitcoin Evolution or Cashless PayGroup where registration will require you to give your address, email and phone number. After sharing your personal information, you will being receiving calls from brokers, compelling you to invest with them and win big. After a few minutes hearing their pitches, you decide to deposit some $200-250. And just like that – the scammers take a fat commission from this initial deposit.
After they are done with you, senior scammers begin working you into putting even more money. They say it’s the only way to profit from trading even more. After making the mistake of investing even further, you’ll begin wanting to get out of this and withdraw what you have left.
Unfortunately, the con-artists have no such thing in mind. They will now begin persuading you to wait it out and not withdraw right now. The angle here is pretty blunt – traders have a limited time period for filing a chargeback with their bank and get their money back. The “recovery department” will simply want to mislead you into missing thе crucial period and, along the way, losing any chance you might have of getting the money back.
It is important here to take notice that both Visa and MasterCard are taking measures to combat unregulated forex brokerages by classifying all forex transactions as high risk. And they are correct in doing so. Furthermore, supporting their intention with clear actions – MasterCard has increased the previous time period of six months for filing a chargeback to a year and a half.
What to do when scammed?
As was mentioned above, scamming is quite the common in the trading world and, sadly, even you might suffer from it. In such an unfortunate case there still may be some available options for you.
You may contact your bank or credit card provider and file a chargeback.
If, however, you have provided the broker with your credit card details, immediately cancel your credit card.
If you have given information regarding your online banking pass – you should switch it asap!
Beware of potential calls from self-described “recovery agencies”! They prey on scammed and vulnerable traders who are desperate to recover their losses. They will require an “up-front” payment to help you, but after paying them, no such help will be coming your way!
