People are now excited about cryptocurrencies and are eager to hop on the bandwagon. Consumers can buy cryptocurrencies and make transactions with them or trade them. This is also where ICOs or Initial Coin Offerings come in and also where ICO scams come in.
While there is still scope to make money through these investments, ICOs are a risky affair. Therefore, when investing in a new type of cryptocurrency, you should be vigilant and research the people and company behind the attractive deal.
There is some cautionary tell-tale you have to go by, like investing in ICOs only through an ICO platform. Know all the precautions, how to avoid ICO scams, and what to do if you have somehow fallen for it here,
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What Are ICOs?
ICOs or initial coin offerings are additions of a new type of digital coin in the market. It is the opportunity to help launch a coin and gain profits on the premiere of a new cryptocurrency.
ICOs are now increasingly popular and are considered to be the ‘popular fundraising methods.’ There are now thousands of coins in the digital coin market. Companies and startups that want to raise funds to create a new coin, app, or service launch an ICO.
ICO is for the young and risky in the cryptocurrency industry.
Many ICOs have been successful and yielded enormous returns for investors, but on the other hand, many have turned out to be complete scams. ICO scams are, in fact, the rotten apples in the crypto-asset industry.
How do ICO Scams Work?
The popularity of cryptocurrency and the hurry to get in on the next deal has led to many scams. Unfortunately, the chances of loss here, even in the best of conditions, are higher than gains. Cybercriminals are pretty adept at scamming people through risky investments.
ICO scams take the investor’s money and either say that the coin launch was a failure and keep the funds or just shut the investor out altogether. The idea behind crypto, forex trading, and ICO scams is that it is easy for scammers to convince the traders that they have lost the money since the trade is risky.
Investors are also less likely to go after the scammers since they are already aware that they could lose their money regardless. One can end these scams when one decides to report them. The risk factor of the fraud should not overshadow the crime.
Many people enjoy risk and are welcoming of the reward, they trade money that they can do without, and it opens a window for scammers to jump in. Every ICO scam follows a pattern that starts with a post or a social media ad that urges people to invest in a new type of digital coin. Then, they give you a sort of a “limited period offer” to make hasty decisions in their favor. Finally, they promise that they are the next big thing and will generate huge returns only to ghost the investor later.
Then you are asked to transfer money via cryptocurrency directly to a personal account. The ICO scammers will then disappear or state that the investment was a failure. They even try to extract more money by saying that they need to send more money to retrieve their funds or that there is a more significant profit if they combine the first amount with additional funds.
The scammers at times even ask for sensitive personal information like bank information, photo IDs, or social security numbers.
How to Identify ICO Scams?
Get rid of ICO scams and phony coins with some extra steps,
Check the project’s whitepaper to gain an insight into everything. It helps layout the background, goals, strategy, concerns, financial models, SWOT analysis, and the timeline for execution for any blockchain-related project.
Avoid companies with no whitepapers at all costs.
Know the team
Thoroughly research the team members of a deal. It is essential because developers and the administrative team are crucial for the success of any ICO. Check their social media platforms such as LinkedIn. Take the initiative to see if their credentials match up, explore the development team’s expertise and if their promises are practical and believable or not.
Evaluate their promises
It is crucial to scrutinize all their marketing tactics and their guarantees practically. If it is too good to be true, it is likely a scam.
How to Avoid ICO Scams?
Examining the patterns of ICO scams helps you recognize them and avoid them seamlessly. You can keep your money and data safe from an ICO scam by,
- Investing in an ICO only on through an ICO platform
- Researching the people and company behind the ICO thoroughly
- Not transferring money to personal accounts
- Ensuring there are payment options
- Not making hasty decisions
- Not clicking directly on links
Ignore the ICOs that take place entirely on social media. You should be referred to an ICO platform and not solely on social media. Check for a secure website and a strong background in financial products and cryptocurrency.
Also, avoid ICOs that accept payments through cryptocurrencies since it makes it easier for a scam to disappear with funds paid in digital currency. On the other hand, if there are multiple options to send money only through the platform, it is a reassuring sign.
What To Do If You Have Been Scammed By ICO Scams?
80% of ICOs are scams, but one can stay safe from them by taking certain precautions like not investing in unprofessional deals on social media and researching thoroughly.
Developers use great tactics to fool investors, and therefore with the current rage being vigilant is crucial before investing in an ICO. So invest your time, be alert, and do your research before investing.
If, however, you end up lending money to ICO scams, we are here to deal with it. Our financial recovery experts have vast experience dealing with regulators, banks, and law enforcement.
Financial Fund Recovery is the right place to turn to when you have been a victim of an ICO scam or any other type of fraud. Talk to us today.