Anyone that has paid attention to the financial world lately should be aware of the way that the crypto community has been suffering. Though there are many legitimate opportunities available, there is a whole history of coins that have hidden their scams from consumers, covering a range of criminal activities. Drug dealers, tax evaders, rogue miners, cyber criminals, and ICO scammers are just a few of the potential issues.
Consumers that manage to stay out of the way of this breed of crook that robs the industry of close to $9 million daily are few and far between. Many seasoned investors have managed to be scammed by one issue or another. In fact, the ICO advisors from Satis Group have calculated that 80% of all ICOs turn out to be scam, though that term has yielded some debate. A failed ICO is different from a fraudulent ICO, since it is common for up to 90% of ICO startups to fail, which happens for many legitimate reasons.
To get a better idea of the true crypto scams that have managed to sneak their way into the industry, read on below for the top 5.
#5 – Centratech
Centratech was in the news only months ago for their association with DJ Khaled and Floyd Mayweather, an obvious attempt to bring attention to itself from investors. Along with their celebrity endorsers, they also proposed a service with Visa or MasterCard debit cards that would let consumers use cryptocurrency as fiat funds, though it did not come to fruition.
Though their ideas seemed helpful, nothing came of the ICO. Instead, once the company had managed to raise $32 million during their ICO sale, the founders were put behind bars by the SEC, who unveiled the “extreme lengths” that they went through to hide the truth from investors. They even made up a team for their platform that included imagine biographies with absolutely no person behind the persona. Furthermore, they paid for endorsements by celebrities to try and bring validity to their platform in the eyes of investors.
Luckily, this was one of the few cases of fraud that actually will be forced to return their funds to contributors, plus interest. They will also be legally forbidden from participating as officers or directors in any future security offering.
#4 – Pincoin
Pincoin’s deceit is still so fresh in the industry that investors from the ICO are still in uproar. First, there was an ICO that brought in $660 million with about 32,000 investors. The company managed to fulfill their promises of cash rewards and returns, so the investors continued to bring in their friends and publicize the work that Pincoin was doing.
Soon after this ICO’s success, they decided to develop a token called the iFan, which they used to compensate their investors. However, once the tokens were issued, they took their fiat profit and left behind their empty office, a slow and unhelpful website, and a lengthy whitepaper. However, if investors had done their homework, they would have seen that all of the information about the founders and the team could not have been confirmed. This scam is a lesson to consumers to take the time to research the information provided to them.
#3 – HoweyCoins
The HoweyCoins scam is probably the most curious of these issues, because it was actually developed by the SEC itself. Regulators, even now, are feeling the pressure to develop legislation that protects investors with these crypto schemes, but some people have felt that it takes away from the decentralization of the industry.
The SEC’s goal was to protect investors, but it was also to educate and warn them about ICOs that could be dangerous. There were fake social media profiles setup, no background, and phrasing like “you won’t want to miss – act now!” Though it was an effort to show consumers the dangers, it ended up becoming its own danger.
#2 – The Smominru Miner
It is hard to say if the Smominru Miner should could as a scam, but it is definitely considered a type of money heist, which is why it is on the list. This platform was developed by a hacker that used a program called EternalBlue that distributed malware to over half a million computers. The goal was to mine Monero tokens, and no one was the wiser until they saw their computers working at full capacity or their electricity bill shot up.
There was not really any advertising or hype over this effort, but the hackers managed to get away with $3 million in mined funds.
#1 – OneCoin
OneCoin has been brought up in financial circles quite often in the last few months, and it is still available to invest in, though it is definitely not a good idea. This project was called a Ponzi scheme about a year ago in India, preceding the fine that Italian authorities eventually issued. The company advertised to investors, but there was not any actual company to invest in.
There has been a lot of negative attention for this platform, and its servers have since been seized. However, in an almost ironic post, the company highlights the importance of integrity and transparency, though they are definitely acting as hypocrites.
What to Remember about ICO And Other Crypto Scams
There is a simple rule about crypto opportunities – if it looks too good to be true, it probably is. No company can promise returns and the incentive to add friends is usually a sign that it could be a Ponzi scheme. Check information on teams to verify if those individuals are truly a part of the platform, and do not be too quick to invest, even if the opportunity looks like it will wither soon.