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How People have Lost Money to Scam ICOs
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!
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 –
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-
Refer to for AND token details-
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/
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