In a recent report published by the Wall Street Journal (WSJ), out of 3,291 current ICOs 513 are outright scams or high-risk projects. A team from the WSJ analyzed white papers and websites from all current ICO projects and noticed that 513 of these had either identical whitepapers or heavily planarized whitepapers – a key indicator that an ICO is a scam or very poor project with no future.
Red Flags, Red Flags, and more Red Flags
Anyone who knows what they are doing when it comes to investing in ICOs will tell you that you need to be careful of a few key phrases. These phrases immediately give away that an ICO is a scam, but to the average investor who doesn’t know what to look for, these red flags are highly attractive selling points. Just a couple of these phrases are “No Risk”, “Guaranteed Profits” “Nothing to Lose”, and “Return on Investment” (ROI). Worryingly, more than 2,000 of these ICO white papers and websites contained these phrases multiple times.
Scams Everywhere you Look
Unfortunately, there is no barrier to entry when it comes to investing in ICOs. This means that scammers are virtually free to roam around and promise huge returns in order to successfully make a few thousand dollars. Knowledgeable investors will know to leave these scams alone, but your average joe looking to make a quick buck will fall for these smart cons. Thankfully, regulatory bodies are starting to crack down on scammers who use ICOs as a means to con people. The US Securities and Exchange Commission (SEC) has thrown countless people in jail for such crimes. Most recently, a businessman from Brooklyn, NY, was jailed for running two scam ICOs, purporting to offer a guaranteed return on investment to his clients.
Cons Taking a Dark Turn
Once a scam is outed, those who have lost their money will do anything it takes to recover their losses. Unfortunately, sometimes scams are run by dangerous people who don’t take lightly to threats of police action – we all say things we don’t mean when we are angry. Westland Storage is just one of these scams; investors looking to recover their money have received death threats from the founding members of the project and are now living in fear.
Even Experienced Investors Get Scammed
No matter how clever, smart, or experienced you are, you can still be scammed. One victim of a cryptocurrency scam that we spoke to has a wealth of knowledge and experience in crypto investing, but one scammer just showed his skills. After playing a long game to gain the victim’s trust, he installed a script in the victim’s wallet that redirected all coins to his account, leaving the victim both furious and out of pocket. So, if you get scammed, don’t think it’s because you’re an idiot, it happens to the most experienced of crypto investors too.
The ICO space is still reminiscent of the Wild West – in spite of efforts to revamp its image – so there are a lot of scammers out there capitalizing on this trying to make a quick buck. The most important thing you can do is over-research the project before investing in the ICO. Never throw money into an ICO unless you know it inside out and have done a lot of research. Remember, stay safe out there, as ICOs can be dangerous.