Red flags to watch out for- ICO alert | Frauds and Scams edition

loading Red flags to watch out for-ICO alert

Vitalik Buterlin insists that 90% of the ICOs will fail and his prediction seems to be right. Few of them are made by fraudsters, who will run by the invested, money as soon as they can afford to raise afford to buy a Lambo. Others work hard to promote their products that are unique and world-changing and one day they discover that all the money is invested in marketing and they have no funds left to develop whatever they promised. And only a handful of ICOs is allowed to crowdfund their project and bring it to reality, therefore, the chances are high where people invest in a scam ICO than in a trustworthy one. There are signs that help to detect the fraudulent coin offering.

Red Flag 1: Poor online presence

Scam ICOs are not specially born, all they do is they create an impression as of a real project. Their aim is not spending money on money on high-quality marketing and so they usually go with simple websites and partially active accounts in the social network. Don’t forget that creating such an account is free and it is instant. So even if the project has an “official Twitter “or “official Facebook page “it does not prove that it’s a real one. They normally don’t give any feedback to the user’s question even in case if it happens their answers are vague and not clear in thought. When you take a look over the members of the team the fraudulent projects will not have any Google history so tracking them is not possible. If the CEO claims that he has 15 years of experience in financial technologies but all he has is 15 connections in his Linkedin profile and so this ICO is a fraud.

Pages that are found with the pictures of the team members has a calming effect on potential investors. It shows that if the founders are not afraid to show their faces when they have nothing to hide and that does not mean that there is nothing, the photos might be some random taken from the internet.

Some Chinese ICO, for example, has uploaded the picture of Ryan Gosling as their graphic designer.T he actual truth is they accept Ryan Gosling because everybody knows him (except Chinese ICO launchers). Yet there are hundreds of websites with pictures of people who have no connection with the projects. Have a search in Google images to know where the images come from. There are so many ways to draw the attention of investors and one is the involvement of a fake celebrity. If there are names of Andreas Antonopoulos or Winklevoss twins on the websites, but those influencers would never have uttered a word about ICO, then it’s a direct sign of a scam.

Influencers never said a word about the ICO—it’s a direct sign of a scam.

It’s very rare to find a platform where users can freely communicate or ask questions to the team and check if there is any. It can either be a Slack Channel or Telegram chat group, where users can interact with the project. If there is no means of communication then it means the team is afraid of questions and they are not able to answers or accusations which can scare away investors. That is the main reason to be suspicious.

Red Flag 2: Plagiarized Whitepaper

A whitepaper is a document that provides all essential information about technical details of the product, use of tokens and future plans. It is quite a challenging Venture to write on the whitepaper and only serious projects can afford it. It’s just easier to copy it from similar projects. Creating a patchwork whitepaper is the most adventurous fraudsters rather than stealing from one whitepaper creating a patchwork whitepaper is easier and such documents are not proofread or checked they are just a compilation of different whitepapers which persuade potential investors to donate money. The only worse thing than a plagiarized whitepaper is a poorly written one. If a project can’t hire a specialist who can write a decent document then there it ends up in a hilarious piece of art like Whitepaper of Arbitrage Crypto Trader ICO. This high-quality whitepaper shows the serious approach to the project.

Red Flag 3: Using blockchain for meaningless purposes

The work of a blockchain is like a magnet that attracts investors and it is great technology with lots of uses but it does not fit everywhere. If the aim of the project is to breed rabbits on some farm in the countryside and it uses blockchain and token issues claiming that it will help breed the fluffiest ones. You don’t need block chains and tokens to breed rabbits. You don’t need blockchain and tokens to make chocolate. There is no need for blockchain and tokens to grow tomatoes. If you get to know that the purpose of using blockchain in your project is meaningless, then it’s used only to draw attention and it’s not a good sign too.

Red Flag 4: There are no developers on the team

Every single project has a team of developers and they just not only create a product but work on improving it. If the project claims to an open-sourced one and there is a GitHub page but the first and last update is done a month ago. Doesn’t it seem credible? If you see an ICO board like; CEO, Project manager, Marketing manager, PR Manager, Event Manager, Coffee-making Manager, Manager of Managers then this start-up won’t last long because Managers might be great, but developers need to create and improve the product.

Red Flag 5: Blatant bribery of influencers aka shilling

 

You could have never heard about the particular project before but then all of a sudden it is found everywhere and you get to see videos like ICO is “the most promising of this year”, influencers advertise the token in social media and the advertisement is shown up every time when you go in search of anything related to crypto which means there is a lot of money spent to convince as many people as possible to invest money in the project token. I agree that advertisements are needed but if the service and product are really necessary and useful then it will automatically draw the attention of the community even without aggressive buying of paid reviews. Marketing the product is not a crime but manipulating the influencers is a very bad sign.

Red Flag 6: Guaranteed profit

“There is no risk. I can assure you that you will get 20% from invested sum every week”. If you hear these words—run as far as you can, rest, and then run a bit more.

We must stop believing in fairy tales and just admit that there is no guaranteed profit existing in the world. There is a risk every time and Bitcoin itself is a risk and not ICOs because If ICO team insists that there is no risk in investing in their project then they are fraudsters, or incompetent in what they do.

 Are there any good ICOs at all?

There are some interesting and exciting dramas other than ICO like Benebit which makes an exit scam with investors funds and some like Giza Device which launches a fake ICO and then go dark once after reaching $2 million.insipite of all these there are small ICOs that are conducted to raise money not to buy Lambo but to develop a product even before launching. Thousands of ICO clients use Bonpay wallet and at the beginning of Bonpay, they issued cards that instantly converts cryptocurrency to fiat money where you can make use of cryptocurrency everywhere. The project has a very active profile in social networks and open chats in Telegram where users can easily discuss the updates and can communicate with the team. Money that is raised in ICO is used to develop new things and improve the existing services. You can easily list out the scams of ICOs which is endless but lack of Common Sense in the problem because Common Sense is very important in choosing the project to invest in. It is a scam if the product seems to be useless or if the investor promises that you will have enormous profits. It’s better to do a little research before investing and always be skeptical

 

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