Pig Butchering Scams (relationship-investment frauds, see link) have already costed 24,000 Americans more than a billion dollars in 2021. These scams originally started online on MetaTrader 4 by using fake Forex platforms. Those have been so successful scammers have moved also to its successor MetaTrader 5, and victims who traded on this platform form a roughly half of all victims we know of. Both MetaTrader 4 and 5 are the preferred platforms of scammers for forex and metal (gold, silver, etc.) trading, and now cryptocurrency futures. BTC/USD is a real market with longing and shorting, but due to its volatility, most licensed brokers don’t participate in its trading. With leverage but not enough reserves an investor can go broke very fast.
The general shift to fraudulent crypto investments has occurred for a couple of reasons. First is the popularity of cryptocurrency. Second, the scammers do not need to open bank accounts anymore for victims to wire funds to, which may list a shell company as beneficiary.
Real Label vs. White Label Licenses
There are two types of labels for using MetaTrader. A real label license is bought directly from MetaQuotes, the maker of the MetaTrader platforms. On the other hand White Labels can be purchased form a real label holder. A White Label-licensed scammer arises when a scammer buys a license to use MetaTrader from a real label holder licensed directly with MetaQuotes. Note that MetaQuotes collect monthly license, support, and maintenance fees from White Label holders. However, except for checking that a registered company has , MetaQuotes has little to no rules or policies to prevent their license holders, real or white label, from using third party plug-in software, such as Virtual Dealer Plug-in (more below).
Except for requiring a White Label applicant be a registered company, there is essentially no due diligence performed by MetaQuotes. However, anyone can pay $100 and register a company almost anywhere in the world. You don’t even need a real address to register a company but instead rent a virtual address. Once a company is registered, basically a shell company, that information can then be used to open a bank account, and the shell company is listed as the beneficiary. With a registered company and a real bank account scammers can then buy a White Label license. They pay monthly license, support, and maintenance fees directly to a real label license holder and by extension MetaQuotes ($5,500 initially then $3000+ monthly from every licensee).
What makes MetaTrader the preferred platform of online investment scammers?
Scammers hide behind the MetaTrader brand, giving legitimacy to their own fake broker platform. All scammers need is a license to access MetaTrader so they can use the Virtual Dealer plug-in or others that allow them to delay the real-time market prices, manipulate those market prices, and simulate account balances, profits or losses. Everything looks and feels real, but it's all a fabrication. What a victim does not realize is that the minute they send funds to the fake broker's bank or cryptocurrency wallet, the funds simply go straight to the scammers' pockets and used for nothing else. All the trades the scammer pretends to guide a victim to buy/sell/long/short, are never on real market data or with real funds.
MetaQuotes claims to solely be a software company who owes no due diligence to root out and prevent scams occurring on their platform. They will generally cooperate with law enforcement requests, but they will merely always pass the request to the real label holders, who are not always cooperative. Sometimes we have found real label holders themselves to be scammers! Throughout this process victims have no means to report to MetaQuotes fraudulent brokers who use MetaTrader.
Virtual Dealer Plug-in
Virtual Dealer Plug-in is a third-party software designed for use with MetaTrader. Its sole apparent purpose really is to manipulate actual market prices, delaying signals and even making fake account profits, losses and account balances. After trading has concluded, scammers can even go back into the charts and graphs in MetaTrader and change the prices. If a victim tries to go back and compare real market data to the MetaTrader charts, they will always match. This is because the charts, graphs, candlesticks, prices, etc. were changed inside MetaTrader using Virtual Dealer after the fact. Scammers may even tell the victim to look at their MetaTrader account statement and compare it to real market data, which makes gathering evidence difficult.
The scammers may even ask their prey to first open a demo account to "practice". When a victim withdraws funds, they are they told to pay a tax. Many victims, who likely only opened broker accounts for the first time, don't realize that only a government can collect taxes, not a broker. Also, victims can be told there is suspicious / money laundering activity detected on their account so a fee must be paid. The scammers will just keep on asking a victim to pay and pay, with many victims even forced to take out loans. In the end scammers will just block the victim and walk away.
As scammers are shifting to crypto investments, MetaQuotes is attempting to retain the lucrative revenue stream from the white label licenses by now allowing crypto trading on MetaTrader. With no rules on MetaTrader, not only does this help sustain MetaQuotes' revenue from fraudulent brokers but also opens the door for bad actors from the cryptocurrency space.