6 Ways to Spot an Initial Coin Offering Scam

Earlier this year in February, cryptocurrency news site Bitcoin.com announced the findings of its study of ICOs that were held during 2017

Some ICO scams have even gone as far as creating fake LinkedIn profiles

The most glaring result of all was that of the 902 Initial Coin Offering projects that were tracked:

• 142 failed before raising funds

• 276 failed after fundraising

• a further 113 were considered “semi-failed” – either the team ceased communication on social media or the project’s community was deemed too insignificant to be considered a sustainable project.


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This means that 59% of token events last year were confirmed – or likely-to-be confirmed – failures. And that’s despite the fact that those ‘failures’ managed to raise a whopping $233 million between them!

Of course, there is always a chance that new start-ups will fail. But many of these projects were scams that had no intention of ever creating a working product, plain and simple. And that fact underlines how crucial it is for investors to identify potentially fraudulent ventures as early as possible.

As such, what follows is a checklist of questions you should ask yourself before participating in any future Initial Coin Offering:

1 What does the whitepaper and accompanying website look like?

A legitimate project will always have a strong whitepaper before staging an Initial Coin Offering. It provides one of the very few ways for an investor to gain insight into the company and its vision.

If most of the whitepaper content is geared towards the company’s claims concerning future financial rewards – and is also noticeably thin on explaining the technical side and how exactly it intends to achieve those rewards – it’s simply not going to fill investors with much confidence.

If, on the other hand, it contains clear explanations about the technology being used, the team, the product, its intended use cases, the project’s future roadmap and the overall business model, then it should provide more assurance.

Also watch out for plagiarized white papers, which seem to have become more frequent.

Recently, for example, the Dadi project had to come out and address why it copied parts of the SONM white paper. Poorly designed websites should also raise a major red flag.

2 How transparent is the team?

Easily verifiable identities are a must for each and every team member. At the very minimum, each member should have a LinkedIn profile, detailing prior work in the field of blockchain (especially for the developers), or in the industry with which the product is concerned.

The more evidence of team members being previously or currently involved in related business activity, the better for the legitimacy of the Initial coin Offering project.

But if the team remains partially or wholly anonymous, with little to no online track record, this should raise a clear warning sign. Moreover, some scams have even gone to the extent of putting up fake LinkedIn profiles, so it’s worth carefully checking the employment history, qualifications and network/connections.

3 Is the GitHub repository empty?

Open source projects will usually have their code base posted on repositories such as GitHub. This allows everyone to review the code and be able to identify errors/improvements as appropriate. Indeed, even projects that are not open-source should have publicly accessible code that can be scrutinized.

An empty repository, or one that is non-existent altogether, should raise major concerns.

Indeed, a company being patently unclear about how the technology works strongly indicates that the project is a scam. As such, check that the project has uploaded relevant files to the repository.

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4 Is the ICO showing signs of regulatory compliance?

While regulators all over the world continue to hone in on the Initial Coin Offering space more deeply and establish rules and guidelines with every passing week, certain standards of good practice are already in place for new projects to follow.

Know-Your-Customer (KYC) and Anti-Money-Laundering (AML) procedures, for instance, provide a strong indication of a project’s legitimacy and signal to investors that a company is willing to be in compliance.

With that in mind, it also makes sense for investors to know where the company is registered, whether it is easy to obtain a copy of its certificate of incorporation, and whether a list of company directors is available.

5 How disputable are the company’s claims?

New companies are always going to talk up their projects to attract investors. But some have been making claims about their capabilities and what they can offer that are simply not true.

Some have even claimed, falsely, that Vitalik Buterin is among their advisors, such as the Primalbase ICO. Clearly, having the Ethereum founder in a such a role would be a major boon for any new company. But ultimately Buterin himself has had to officially respond that he is acting as an advisor for only two projects.

The company might also falsely claim higher numbers are subscribed to their ICO, as well as promise crazy returns. The fraudulent Plexcoin ICO springs to mind, with investors being promised profits of 1,354% in less than a month, and which ultimately resulted in jail time for the man behind the project.

6 How clear is the roadmap?

A roadmap outlines when an Initial Coin Offering project’s future funding objectives will be achieved, with the illustrative aid of a clear timeline usually published in the whitepaper or on the website. The lack of a clear timeline should alert investors that the project is not concerned about the future, and thus implies that short-term financial gain is the priority.

Such projects should be scrutinized further or avoided altogether.


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author http://www.whatinvestment.co.uk
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ICO Scams Have Raised More Than $1 Billion, Report Claims

Which Is the Most Legitimate Of Them All?

By large, cryptocurrency investors, enthusiasts, and observers are aware of the number of “shitcoins” in circulation. But, Wall Street Journal suggests that the number of fraudulent cryptocurrencies available today could be much more than earlier thought, quoting a figure of over 200 as an estimate.

Facing the most heat are Initial Coin Offerings (ICOs), a novel fundraising method that gained massive popularity in 2017 after making several overnight millionaires.

Of the 1,450 tokens analysed, 271 raised distinctive red-flags, and were found with plagiarized documents in addition to having fake team listings or making claims which displayed all characteristics of deceptive Ponzi-schemes.

Furthermore, most “whitepapers” – which discuss a project’s technology and applications in detail – were found to be copied verbatim from other projects, laughably copying even team names and mission statements in some cases. Other than this, the projects by large plagiarized marketing plans, security features, and developer notes.

Reportedly, freelancers on popular job sites offer their services for as little as $100, and it is imperative that they might have one small script which they keep regurgitating out with different words.

Bradley Bennett, formerly of the Financial Industry Regulatory Authority (FINRA), puts it perfectly:

Copied language, the absence of named employees and promised high returns are warning signs for investors.

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Least Cautious Investors Face Expensive Outcomes

Despite the widespread appeal to conduct extensive research before participating in an ICO, naive investors have drained north of $1 billion into these 271 projects, with some of them still raising funds.

So far, only a total of $273 million has been claimed in the form of lawsuits, which goes to show that investors are still ignorant about the true nature of these projects.

The lure of ICOs as a fundraising method is undeniably impressive, with over $9 billion raised in the form of cryptocurrencies since 2017, as per a Satis Group report.

In a bid to prevent major investor losses, the United States’ SEC has sprung into action, and recently displayed a rather innovative undertaking – a fake ICO – to apprise investors of common fraud giveaways.

Several official warnings have been released by the SEC in the past, both to investors and cryptocurrency projects, to inform them of displaying caution and breaching regulations respectively. Additionally, the regulatory body has come down on controversial projects making bizarre claims, such as promising a fixed amount of profits after a certain time period.

An example is that of Plexcorps, which raised over $15 million on the premise of returning over 1,300 percent profits to investors in the short period of one month.

Naturally, the SEC was not impressed.

Stay Safe Investors!

In conclusion, CCN appeals its readers to conduct due-diligence before investing in cryptocurrency projects, and most of all, being alert for clear giveaways like buggy websites, generic stock images, and online reviews on reputed forums.

Not all cryptocurrencies are fraudulent though, as there are certainly great projects in the market which solve real-world problems and are backed with impressive partnerships.

Echoing these thoughts is Mr. Bennett, a law partner at Baker Botts LLP, stating:

“There are going to be some legitimate players that emerge from this but it’s going to be a handful—a lot of it looks like penny-stock fraud with lower barriers to entry.”


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author Shaurya Malwa
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A cryptocurrency exchange had $3.5 million stolen — and thinks its security chief ran off with the money

Indian exchange Coinsecure has lost over $3.5 million and is blaming its head of security.

The company claimed its CSO Amitabh Saxena was extracting a cryptocurrency known as bitcoin gold in order to distribute it to customers, but the funds were lost in the process.

Coinsecure blamed him for stealing the bitcoin.

Indian cryptocurrency exchange Coinsecure has lost over $3.5 million and is blaming its head of security.

In a message posted to its website Thursday, the company said that its Chief Security Officer (CSO) Amitabh Saxena was extracting a cryptocurrency known as bitcoin gold in order to distribute it to customers. But Coinsecure claimed the funds were lost in the process.

Director Mohit Kalra has sent a letter to Indian authorities about the incident. In the document posted on the company’s website, Kalra said that 438.318 bitcoin have gone missing. This equates to just over $3.5 million at Friday’s bitcoin price.

Users’ funds were kept in a secure bitcoin wallet and the private keys were kept by Saxena and Kalra. Private keys are essentially required to send cryptocurrency out of a storage wallet. Having the private key allows you to move money.

“As the private keys are kept with Dr Amitabh Saxena, we feel that he is making a false story to divert our attention and he might have a role to play in this entire incident,” the letter written by Kalra said.

“The incident reported by Dr Amitabh Saxena does not seem convincing to us. Dr Amitabh Saxena also has an Indian passport and he might fly out of the country soon. Therefore, his passport should be seized so he cannot fly out of the country.”

CNBC has emailed the Cyber Crime Cell department of the Delhi police department, where the letter was allegedly sent to, in order to confirm if it is real. There has been no response as of yet.

Coinsecure said it is trying to recover the lost funds, but it will reimburse customers from the company’s personal funds. CNBC has reached out to the company to ask when this process might begin and has yet to receive a response. CNBC also asked if the company has had contact with Saxena, but a spokesperson pointed to the statement on Coinsecure’s website.

The loss of funds marks one of the first major issues on an Indian cryptocurrency exchange.

Delhi’s police department warns against people getting involved in cryptocurrencies because of the “absence of legal framework,” according to its website.

“These currencies are normally used by criminals operating on the dark web or the hidden web. Legal, bonafide businesses do not normally use bitcoins. Therefore any request for business transaction in bitcoins should raise suspicious and should be avoided,” the police department said.

India’s central bank recently banned regulated financial institutions in the country from dealing with cryptocurrencies.

Coinsecure is not the only exchange in the world to suffer problems like this. The most recent high-profile case happened in Japan, where Coincheck had over $500 million worth of cryptocurrency stolen.


 

Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author Arjun Kharpal 

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4 Cryptocurrency Scams Every Investor Should Know

Scammers are always actively developing new and improved ways to cheat people and rob them of their hard-earned money. The cryptocurrency industry is not an exception. ICOs and cryptocurrency exchange trading are the newest ways to scam people in the industry. For initial coin offering scams, the scammer sells tokens for either cryptocurrency or fiat money and promises to hand out incentives later.

Cryptocurrency Scams You Should Look Out For

1. The Popular ICO Scam

This is when a new cryptocurrency is launched by investors and criminals, create fake initial coin offerings to get money from individuals. It can also happen when hackers impersonate the real ICO and deceive investors into paying. The scammers use phishing emails to promote a fake pre-sale to unsuspecting persons. Make sure you do enough research before you buy any tokens during ICO.

2. Using Fake Digital Wallets

Every investor needs a cryptocurrency wallet to store digital assets. However, not every wallet in the market is original. Scammers create and promote fake wallets on the web.

You’ll download the wallet on your device successfully, but as soon as you put your cryptocurrencies in it, you’ll lose everything. Again, do thorough research before you use any cryptocurrency wallet. Only use a wallet from a provider that has a good track record.

3. Phone-porting Scam

This is another common cryptocurrency scam. The criminal will take control of your mobile number and trick your mobile provider into giving them control over your account. They’ll reset your password and do what they like with your wallet. To avoid falling for this scam, you can use 2-factor authentication to protect your account.

4. Cryptocurrency-stealing Malware

Nearly one-third of typical home computers are infected with malware. There is a particular malware that has been linked to cryptocurrency scammers. It allows the scammers to steal your Bitcoins and other cryptocurrency assets. To protect yourself, you should make sure that there is always a good antivirus running on your computer.

These are just a few of the common cryptocurrency scams you should look out for.


 

Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author Uma Johnson

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