Ripple CTO Emeritus Issues Scam Alert on Copy Trading: What's the Real Risk?

Source: CryptoNewsNet Original Title: Ripple CTO Emeritus Issues Scam Alert on Copy Trading, What’s Real Risk? Original Link: https://cryptonews.net/news/security/32292259/ Ripple CTO emeritus David Schwartz has sounded off a warning on the hidden risks of copy trading.

This was in response to a conversation initiated on X by Coin Metrics co-founder Nic Carter. Carter shared an X user’s tweet who claimed to have turned $12 into $100,000, gaining over 8,300x by going all-in and doubling his bankroll 16 times in a row on short-term BTC moves, all the while sharing his bets and the reasoning behind them along the way.

Carter refers to this particular scenario as the oldest trick in the book and explains how it works.

The individual creates dozens of accounts, hundreds if necessary, while making risky trades on all the accounts (in this case, all-in coinflips, every day). The accounts go to zero at an exponential rate, but a handful survive. Carter noted a win probability of about 50% per round for about 100 accounts.

Carter highlights the possibility of an account winning seven times in a row, and then the trader reveals his lone winning account, convincing people to copy trade while farming them and profiting afterwards. He noted that this scam was first recorded in the 1870s, where people would mail out letters with stock tips to a large number of people, cull the losers and convince the few winners that they were stock picking gurus.

Former Ripple CTO Shares Hidden Risk

Ex Ripple CTO David Schwartz joins the conversation on X, highlighting this copy trading trick as a scam many have pulled unintentionally.

Many have pulled this scam unintentionally, genuinely thinking they have some edge when they were just lucky. The problem with choosing copy trading is that it’s all but impossible to avoid following someone based solely on past luck.

Schwartz explains this inadvertent scam by stating that many in this scenario genuinely think they have some edge, meanwhile they were just lucky. The problem with choosing copy trading, according to the former Ripple CTO, is that it is all but impossible to avoid following someone based solely on past luck.

In this light, Nic Carter added as a warning to the crypto community that if someone ever shills them on their track record trading, a liquid book, they must ensure that it is their only account. They should get the individual to commit to a single account and then monitor their track record on a go-forward basis.