have an account?【sign in】Biggest ICO Scams: Understanding and Avoiding Common ICO Scams
baldwinauthorInitial Coin Offerings (ICO) have become an increasingly popular method for startups and venture-backed companies to raise capital. However, along with the rapid growth of this industry, there has been a rise in fraudulent ICOs, often referred to as "scams." In this article, we will explore the largest ICO scams in history and offer insights into how to avoid becoming a victim of these deceitful practices.
The Top 5 ICO Scams
1. OneCoin (2016-2017)
OneCoin is widely considered to be one of the largest ICO scams in history. This cryptocurrency purported to be a new investment opportunity, but in reality, it was a Ponzi scheme. OneCoin co-founders Ricky and Bengiah Lee have been indicted in several countries, including the United States, for their involvement in this multi-billion-dollar scam.
2. PlexCoin (2017)
PlexCoin is another high-profile ICO scam that targeted investors in Canada and the United States. The company claimed to have developed a new cryptocurrency that would deliver impressive returns on investment. However, after raising over CAD $30 million, the company disappeared, leaving investors with nothing but a pile of digital files.
3. GoCoin (2017)
GoCoin was a cryptocurrency exchange that promised to revolutionize the way people traded digital assets. However, the company was found to be engaging in widespread fraud, including false advertising and manipulating trading prices. As a result, the exchange shut down and investors lost millions of dollars.
4. Bitclico (2018)
Bitclico was another ICO scam that targeted investors in the United States and Canada. The company claimed to have developed a new cryptocurrency that would deliver impressive returns on investment. However, after raising over $25 million, the company disappeared, leaving investors with nothing but a pile of digital files.
5. EOS (2018)
EOS is a popular blockchain project that has raised over $4 billion through various ICOs. However, concerns have been raised about the transparency and accountability of the project, as well as the credibility of its leaders. While EOS may not be a scam per se, its handling of investor money and governance structure have raised red flags among investors and industry experts.
How to Avoid ICO Scams
As the above examples demonstrate, ICO scams can be highly profitable for the scammers, but devastating for the victims. To avoid becoming a victim of an ICO scam, investors should take the following steps:
1. Do your due diligence: Before investing in an ICO, conduct extensive research on the company, its team, and the project. Make sure to review the white paper, project roadmap, and other relevant documentation.
2. Verify the credibility of the team: Check the backgrounds of the company's founders, advisors, and team members. Make sure to look for any red flags, such as fake social media profiles or misleading biographies.
3. Read the fine print: Be sure to review the terms and conditions of the ICO carefully. This should include details on how the money raised will be used, the duration of the offering, and the rights and obligations of the investors and the company.
4. Don't invest more than you can afford to lose: ICOs are often high-risk investments, and investors should never invest more than they can afford to lose.
5. Be cautious of aggressive marketing tactics: Scammers often use aggressive marketing tactics to convince investors to part with their money. If something sounds too good to be true, it probably is.
Initial Coin Offerings have the potential to be a valuable source of funding for startups and venture-backed companies. However, the rise in fraudulent ICOs has raised concerns about the integrity of the industry. By taking the necessary steps to conduct due diligence and be cautious of aggressive marketing tactics, investors can help ensure that they are not part of a scam.