It is advisable to invest your time, be self-aware, and do your own research before investing. Concluding Linesĭue to a lack of regulation, developers can use a dozen tactics to fool investors, and therefore with the current craze, being careful and doing one’s due diligence is a must before investing in any ICO. Moreover, checking out the GitHub repositories is another strategy to identify ICO scams. Follow your gut and then decide whether you should invest or not. If everything seems good, you can start investing, but if you feel off about an ICO, that’s probably because it is. Before you decide to choose and go with any ICO team, evaluate their promises. Evaluate Promises and Go With Your GutĮvaluating promises is a very crucial step. Explore whether the development team has the expertise that they believe they have or not. It is necessary to make an attempt to see how their credentials match up before deciding if the team is real. Check out their profiles on social media platforms such as LinkedIn and other outlets. This is crucial because developers and the administrative team are the most important success factor for any ICO. Thoroughly Understand the Teamīefore making any investments, the best protection measure is to thoroughly research the individual team members of a project. Whitepaper lays out the background, goals, strategy, concerns, financial models, SWOT analysis, and the timeline for implementation for any blockchain-related project thus, companies that don’t provide whitepapers should be avoided at all costs. To avoid ICO scams, go through the project’s whitepaper as it will help in gaining deeper insight about everything. A few of the ways are as follows: Read Whitepaper In order to get rid of Fraudulent ICOs and sketchy coins, there are many ways that can help you avoid such potential scams. Thus, rather than engaging in any legal investment activity, the deceitful actors focus on attracting new money to make promised payments to earlier investors and turn some of the invested capital for personal usage. In this scheme, organizers promise high returns at a later stage just to attract more investors. In the Ponzi scheme, organizers request new investors by promising to invest funds in opportunities to generate high returns with little or no risk at all. Naive investors that are unaware of the authentic websites are sometimes fooled due to such fake websites and lose their ICOs. URL ScamsĪnother popular method involves creating fake websites that match ICOs and instructing users to deposit coins into a compromised wallet. Sometimes, when developers plan to mislead investors to prefer to launch their ICO at a fake exchange, this type of scam is known as an “exchange scam.” White Paper Plagiarism ScamĪnother ICO scam is the white paper plagiarism scam, in which the scammer tries to copy the white paper of a promising ICO and then decides to launch it using a similar or different name. In this type, ICO fails to pay out promoters who were promised financial rewards for PR activities. Bounty scam is another common type of ICO scam. When it comes to bounties, they have even made their way into the cryptocurrency ecosystem, and many ICO projects have witnessed the inclusion of the concept. In 2018, it was reported that more than $100 million in funds contributed to ICOs were stolen as an exit scam. Exit ScamĪn exit scam is a fraudulent operation organized by unethical cryptocurrency promoters who collected funds for an ICO and suddenly disappear without leaving any information to investors. Check out Blockchain Council now! Categories of ICO ScamsĪs we have understood what ICOs are, let’s explore some of its categories. Want to become a Certified Cryptocurrency Expert? Wait no more. In fact, you can say that scams related to ICOs are the black sheep of the crypto-asset industry, and these sheep are pretty diverse. Although some of the ICOs have yielded massive returns for investors, various others have turned out to be frauds. ICO is the cryptocurrency industry that is equivalent to an IPO, but the significant difference between the two is that IPO is usually for well-settled companies, whereas ICO is generally for the young and risky. Organizations looking to raise money to create a new coin, app, or service launches an ICO as a method to raise funds. These are considered as ‘popular fundraising methods’ used by companies and startups.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |