Let’s move on to identify an ICO scam that is pretty simple to know by reading one of our known contents that will help you thousand times.
A series of initial coin offerings (ICOs) launch every month, along with dozens of cryptocurrencies. This trend is gaining popularity among investors as a newly launched one. All these facts tend to entice several scammers. There are three traditional categories of ICOs: scams, successful, and failed. A scam ICO is a fraudulent exhibition of unethical activities. When an ICO is successful, it raises a predetermined amount of capital within a defined timeframe. Otherwise, it is deemed unsuccessful.
The pace of crypto development makes it difficult to keep up with all the technical terminologies. It is best to begin by considering that cryptocurrency is not safe. There is no guarantee of a crypto-based start-up being legitimate. In any case, educating yourself about ICOs will help minimize the chances of being a victim of a scam. Whenever you are involved in a crypto scam, you should immediately report it and seek the help of a cryptocurrency recovery expert.
What are ICOs?
Initial coin offerings are a term used throughout Europe and America. They were previously regarded as a popular way to raise funds for start-ups. ICOs are an effective way for organizations to seek funds from other companies. The cryptocurrency market in an ICO is similar to an IPO, and its major differences include that IPO generally focuses on well-established businesses. In contrast, ICO is generally focused on young investors with risky interests. Although some ICOs produced huge profits for investors, others were deemed frauds.
Exploring the Categories of ICO Scams
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Exit Scam
Exit scams occur when cryptocurrency promoters steal investors’ money during or after an initial coin offering (ICO). Since cryptocurrency is decentralized and regulation-free, it’s difficult to spot exit scams. There are ways to recognize an exit scam, such as red flags on the team’s credibility, projected exceptional returns, a nonexistent working model, and unusual documentation. However, you must immediately seek out a crypto recovery service if you have been a victim of an exit scam.
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Phishing Scam
The purpose of a phishing scam is to trick people into providing personal information necessary to access funds. The scammers want the keys to the private crypto wallets of investors, and the Phishing scam is often executed after the initial coin offering (ICO). It involves sending an email containing a link to a particular website. To access the crypto wallet, the visitor must enter personal information. When scammers receive personal information from investors, they immediately begin to conduct unethical activities. You should not delay seeing an expert if you suffer a cryptocurrency loss.
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White Paper Plagiarism Scam
Other ICO scams include white paper plagiarism fraud, where a fraudster uses a similar or different name to attempt to copy a promising ICO’s white paper.
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URL Scams
Another popular technique is the creation of fake sites matching ICOs and the instructions for depositing in unauthorized accounts. Naive investors are sometimes tricked into thinking they have faked websites.
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Exit Scam
ICO withdrawal scams are fraud operations facilitated by unethically-organized Cryptocurrency promoters who have collected money for ICOs and disappeared suddenly without revealing the investor’s identity. In 2018, ICO investors were reportedly given more than $100m from ICOs in return for allegedly stealing them.
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Bounty Scam
The bounty concept has even made its way into the cryptocurrency ecosystem, and many ICO projects have implemented it. In addition to bounty scams, ICOs may also involve other types of scams. It occurs when an ICO fails to pay promoters promised financial rewards in exchange for their PR efforts.
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Ponzi schemes
According to Ponzi schemes, investors are encouraged to invest in opportunities for achieving great returns with little or zero risk. Organizers are hoping for higher earnings later to attract new investors. Instead, the deceitful actors are focused on recruiting new money to give promised payments or use some money for personal use.
How to Identify an ICO Scam?
The reason for its growth is the introduction of new projects offering their services through cryptocurrencies. In addition, many people who have never dealt with crypto are now buying cryptocurrencies. As a result, the number of ICOs is increasing every day. With this increase in the number of ICOs, we are also seeing a rise in the number of scams that are happening within this industry. The following ways to identify an ICO scam easily.
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Go Through the Whitepaper
Understanding the project’s whitepaper will help you avoid ICO scams. It is imperative to avoid companies that do not provide whitepapers for blockchain-related projects, which explain background, goals, strategy, concerns, financial models, SWOT analyses, and timelines.
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Evaluate Promises for Putting Investment
The importance of evaluating promises cannot be overstated. It is important to evaluate the promises of any ICO team before you decide to go with them. If everything seems okay, you can invest, but it might not be your best investment if you feel uneasy about an ICO. Decide whether to invest based on your gut feeling. Furthermore, GitHub repositories can also be used to identify an ICO scam.
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Thoroughly Research with Your Team
The best way to protect your investment is to research each team member before investing thoroughly. Every ICO depends on the success of its developers and administrative team. Look at their profiles on LinkedIn and other social media platforms. Considering the team’s credentials is essential before deciding whether they are genuine. Make sure that the development team possesses the expertise they claim to have.