Types of Ico Scams and how to identify them: A guide
Initial Coin Offerings are referred to as ICOs. These are regarded as “popular fundraising techniques” that businesses and startups employ. An initial coin offering (ICO) is a way for companies to obtain money to develop a new coin, app, or service. The cryptocurrency version of an IPO is called an initial coin offering (ICO), however the main distinction between the two is that an IPO is often reserved for established businesses, whereas an ICO is typically for start-ups and high-risk investors. While a number of initial coin offerings (ICOs) have provided investors with substantial gains, some have proven to be scams.
Few Types of ICO Scams
An exit scam is a fraudulent scheme run by dishonest cryptocurrency marketers that take money for an initial coin offering (ICO) and then abruptly vanish without providing investors with any information. More than $100 million in ICO contributions was reportedly taken as part of an exit fraud in 2018.
In terms of bounties, they have even found their way into the cryptocurrency environment; the idea has been included into several initial coin offerings (ICOs). One more prevalent kind of ICO scam is the bounty scam. In this kind of ICO, promoters who were promised money incentives for PR efforts are not paid.
Making phony websites that look like ICOs and telling people to deposit money into a hacked wallet is another well-liked technique. Sometimes these phony websites trick unsuspecting investors who are not aware of the real websites, causing them to lose their initial coin offerings (ICOs).
An “exchange scam” is a term used to describe schemes by developers to deceive investors into thinking that launching an initial coin offering (ICO) at a phony exchange is preferable.
White paper plagiarism is another type of initial coin offering fraud when the con artist attempts to replicate the white paper of a prospective ICO and then chooses to launch it under a similar or different name.
Identifying ICO Scams
Go through the whitepaper.
Read the project’s whitepaper to acquire a deeper understanding of everything and assist ward off ICO frauds. Any blockchain-related project should have a whitepaper, which lays out the history, objectives, strategy, concerns, financial models, SWOT analysis, and the implementation timeframe. As such, businesses without whitepapers have to be avoided at all costs.
Gain a Complete Understanding of the Team
The greatest line of defense is to properly investigate each member of a project’s team before investing any money. This is critical since the administrative group and developers are an ICO’s most critical success factors. Look through their social media accounts on sites like LinkedIn and others. Before determining whether the team is legitimate, it is important to try to determine how their credentials align. Examine whether the development team actually possesses the competence they claim to.
Consider Promises and Trust Your Intuition
Assessing commitments is an essential first step. Consider their promises before deciding to partner with any ICO team. You can begin investing if all appears OK, but ifomething about an initial coin offering (ICO) doesn’t feel quite right, it usually is. When deciding whether or not to invest, trust your instincts.
