10 Signals Of An ICO Scam

FinanceX
FinanceX
Published in
5 min readOct 30, 2018

In 2017, keen investors took advantage of a red-hot bull market and invested in a number of unimaginably profitable ICOs. But due to the large number of scams in 2017-2018 resulting in well over $1 billion being taken, former ICO investors are significantly more reluctant to stake their hard earned assets on another potential scam.

However, this does not mean there aren’t ICOs of amazing quality with ideas that are truly groundbreaking and revolutionary. Investors just need to grasp and understanding of the signs that a project is fraudulent, set up to steal users’ property. Reading through the 10 signals below will help you identify and avoid those projects slipping their dirty hand in to your pocket.

Perhaps the project doesn’t need to use blockchain

Does the project solve a problem for their future customers and the community? Perhaps there is already a similar product out there that isn’t using blockchain. Maybe blockchain isn’t necessary for this product. It’s definitely worth thinking about, especially if you think you’ve found the perfect investment. Some scams that sound very attractive aren’t actually well-suited to blockchain.

The team has no name and/or no experience

The world of crypto is being flooded with successful and reputable individuals within the financial, banking, and technology sectors. Investors don’t have to settle for anything less than a highly experienced team within the relevant industries. Be diligent in your research in to a team. Some who create fake profiles have turned it in to an artform so look a little closer and uncover ‘truths’ hidden layers.

Some of the world’s best known ICOs, such as FinanceX below, contain trustworthy team members. Nikolay Shkilev, Vladimir Nikitin, Sydney Ifergan all high ranking advisors on ICO bench and regularly attend major events in the crypto industry.

FinanceX advisory board

Vague Whitepaper!

The Whitepaper is mandatory part of any ICO. It shows a detailed analysis of the project, idea, vision, and team. This is the founding document of any ICO and potential investors should read it thoroughly and get a second opinion. If it’s not clear enough, stay well away. If you can’t pick holes in it, put it on the shortlist and come back to it.

No community and/or no activity

FinanceX community channels before the upcoming ICO

What’s a business without any community? The ICO format means a community is critically important. The more active and engaging a company is, the more trustworthy. In these cases, the community does a huge chunk of the sales and marketing for the blockchain start-up. Is there very little content being created? You may want to look elsewhere.

Not appearing in public

Although this is the 4.0 era and most interaction is done on the Internet, nothing beats meeting people face-to-face to see what they are really about. There are countless blockchain events going on around the world so there’s no excuse for an ICO bound company to not be present their brand and faces to the like-minded people of the blockchain community. When a project is active online but never attends events, it’s a good idea for investors to steer clear.

Leaders of FinanceX at the event in Indonesia

Fake addresses

ICO projects often have their headquarters located abroad because governments have not approved the legalization of cryptocurrency. In this part of the world, some of the most popular countries for ICO projects are Singapore, Thailand, the Philippines, and Malaysia ... You should check whether the offices that ICO projects publish are real or just a few temporary lines in an attempt to build trust with customers.

No MVP or demo products

These days investors need to see an MVP or demo product with some functionality in order to invest in an ICO. It’s unbelievable that the majority of ICOs are pitched on nothing more than an idea and a Whitepaper. A functioning product means investors can experience in part what the project has promised. Good ICO projects now offer MVPs or even full products before launching ICO sales to build a solid investor trust in electronic money investors.

Promising profits (Ponzi)

With the crypto market as unpredictable as it is , no one knows for sure when a new coin will be profitable. The quality ICO projections will do their best to predict the future fortune of a coin once it’s listed. But some ICOs market it as a guarantee. Previously, the Vietnamese crypto community was too confident about BitConnect, iFan and Pincoin. ICO projects that give investors confidence promising a profit of 30% per month are far too good to be true.

Roadmap unclear

It is unlikely that the plan will be implemented properly. ICO projects after calling a capital will begin to take steps to expand and consolidate their projects. A roadmap tells investors where their money is going, for what purpose and the driection the project will head. There are many impractical paths and over-optimistic predictions so you should keep this in mind.

Clear roadmap of FinanceX

ICO price and target excessive

After evaluating the first nine points, consider the last factor directly related to money. The price of the ICO is often divided into several rounds, the tokens cheaper at the beginning, gradually getting more expensive. If you are an experienced investor, try to compare it with the previous ICO see how it’s different. What’s the total supply? What are the prices? Are the soft and hard caps realistic? Maybe a more modest the project is the better option.

Conclusion

Although investors lost significant amounts of money investing in scam ICOs, we now have the hindsight to learn from those mistakes. Current and future ICOs are well aware of this and are working to build trust with their communities. But there are groups of people out there that have bad intentions. Look for the 10 signals above and take your time! All the best!

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Don’t forget to grab FNX tokens before the Presale ends!

FinanceX has already published more than 40 articles so visit our Medium publication by clicking the link below to find more about us!!!

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FinanceX
FinanceX

FinanceX is a cryptocurrency exchange providing users with a convenient, reliable and secure platform with a specific focus on providing fiat-coin trading pairs