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How People have Lost Money to Scam ICOs

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Crypto Business World

CBW -External Analyst

INDIA

Nov, 09 2018

Nov, 09 2018

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Initial coin offerings represent a billion dollar industry. There is no regulatory committee to govern the action of companies launching ICOs and this has led to fraudulent activity. There is only so much that the SEC can do. According to a report published by CNN, of the 1,450 tokens they analysed, 271 have turned out to be a scam. More than 1 billion USD has been lost to scam ICOs and less than 25% of these funds have been recovered. Investors need to be careful as they are the ones at loss in the end.

Refer to –

https://www.ccn.com/ico-scams-have-raised-more-than-1-billion-report-claims/

     Smart investors must ensure that the project details of the crypto asset marketed by the company are viable and authentic. Some organizations have published fake whitepapers which have been copied from other organizations or are blatantly wrong and improbable. Other companies have published fake team lists and have even gone to the extent of copying the names of members from other trusted organizations! All in all, it is absolutely necessary to gauge all aspects of an ICO before investing in it as the loopholes in a project may be immense, and the possibility of fraud large. Bounty rewards and celebrity endorsements are generally not a good sign. 

     There are several ICOs being endorsed by celebrities. These celebrities are paid a fee for their endorsement. Hardly any details are provided on the project and investors are drawn into investing in the ICO because of the celebrity associated with the project. Centra is an ICO which was endorsed by Floyd Mayweather and the two co-founders, Sohrab "Sam" Sharma and Robert Farkas were arrested for fraud. The ICO raised 32 million USD and was banned by the SEC. They claimed to offer a debit card authorized by MasterCard and VISA that would allow its users to convert cryptocurrency to USD and spend in stores. This was not the case as they had no connection with both companies. Their profiles were fake as well. 

Please refer to-

https://www.cnbc.com/2018/04/03/floyd-mayweather-backed-cryptocurrency-ico-fraud-sec-says.html

     PlexCorps is a cryptocurrency company banned by the Securities and Exchange Commission (SEC) for fraudulent practices. They were accused of raising around 15 million USD and swindling their investors and their assets have been frozen. If an ICO promises huge returns on the crypto asset they are selling, they are likely to be a fraud as there is no guarantee of profit in the cryptocurrency world.  PlexCorps promised massive returns on their crypto asset and advertised a non-existent team of experts in the quest of quickly putting across their stance in the eyes of their investors and gaining their trust. The financial crimes of its founder, Dominic Lacroix were conveniently hidden and it was only a matter of time before a complaint was lodged against them.

 

Refer to –

 

https://www.theverge.com/2017/12/5/16739348/sec-plexcorps-plexcoin-ico-scam-asset-freeze-charges

 

     Be careful while accessing the authenticity of an ICO on the basis of the LinkedIn pages of their team members. There are several scam ICOs that have created fake LinkedIn pages to attract audiences. AriseBank is an ICO that comes to mind. It has been closed by the SEC after a 600 million USD fraud. The CEO, Jared Rice created a fake LinkedIn page according to which he is also the CEO of a Dallas marketing firm, Dotoji. The address provided for the firm is a residential home in Dallas!

http://markets.businessinsider.com/news/stocks/sec-shuts-down-arise-bank-600-million-alleged-ico-scam-dallas-texas-2018-1-1014571716

     If the profile of the founders seems to be a scam, steer clear. Empire Card is an ICO which used the image of Sabine de Poncins (a French actress) as their CEO under the name of Patricia Harrison. Never invest in an ICO with an anonymous team!

Donald Trump Assigns New Task Force to Fight Cybercrime

     Donald Trump, the President of the United States has assigned a task force to investigate pervasive fraud existing within the cryptocurrency universe. The President signed an official executive order on the 12th of July, 2018 to establish a new task force to prevent fraudulent activity and "to investigate and prosecute crimes of fraud committed against the U.S. Government or the American people, recover the proceeds of such crimes, and ensure just and effective punishment of those who perpetrate crimes of fraud."

Please refer to –

https://www.whitehouse.gov/presidential-actions/executive-order-regarding-establishment-task-force-market-integrity-consumer-fraud/

     The task force replaces the originally existing Financial Fraud Enforcement Task Force which was established on the 17th of November, 2009. The team will be led by the Deputy Attorney General Rod Rosenstein.

     The Deputy Attorney General will carry on with proceedings as deemed fit by him and will invite representatives from other federal departments of the US government. Other team members include FBI Director Christopher Wray, the Federal Trade Commission, representatives from the Securities and Exchange Commission and the Consumer Financial Protection Bureau (if called upon). Investigations and enforcement actions are set to be ramped up.

Crypto Asset Rating Inc.

     ICO ratings enable an investor to determine whether an ICO is fraudulent or not. Of the many ICO rating organizations, Crypto Asset Rating Inc. is a viable option to choose from. Crypto Asset Rating Inc. is an independent United States based ICO rating platform, offering two security tokens for US-based and non-US based investors under Regulation D and Regulation S respectively. They have developed an algorithm to determine the viability and authenticity of the ICOs affiliated with their project.

Refer to for ANSA token details-

www.CryptoAssetRating.io

Refer to for AND token details-

www.CryptoAssetRating.us

     The blockchain-based rating engine is based on 125+ different rating parameters and is divided into over 15 categories, depending on the business, legal, financial and technical risks involved in investing in a particular cryptocurrency asset. Their team is experienced and is not limited to just providing ratings for various ICOs and also suggests certain changes crypto assets can bring to their structure to get a better rating. This may lead to a change in rating and is visible to investors looking to invest in a particular coin. All registered subscribers have the option to access detailed reports which are published by the organization. Visit the website for more details on the project!

http://www.cryptoassetrating.com/

 

#securities #tokenization #smarts #investments #d #CryptoAssetRating #rating #blockchain #ICO #ANSA #AND #STO #securitytoken #howto #ICOrating


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Crypto Business World

CBW - External Analyst

INDIA

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