what is a 'scam'?

A scam is a fraudulent scheme performed by a dishonest individual, group or company in an attempt to get money or something else of interest. 2017 was considered as the year of ICOs. A wide range of deceptive projects managed to get funded by millions of US dollars. This mainly due to the lack of regulation. There was no customer protection from the governmental side. Back then, most governments had not figured out how to tackle security issues.

How to avoid cryptocurrency 'scams'

Fraudulent projects are detectable, even though they are often managed in a very professional manner. We advise you to look out for the following red flags.

  • Exaggerating marketing campaigns – Marketing is important, but new tech companies should first focus to deliver products and actual use cases. If an ICO is using its funds to advertise with celebrities it increases its probability to actually be a scam.
  • Unrealistic promises – Fraudulent projects have a lack in expertise trying to attract investors with financial incentives. Keep in mind that money is not growing on trees. Unrealistic promises and overcompensations are definitely a red flag.
  • Unprofessional appearance – Mistypings, anonymous teams, copy & paste sections or a missing road map are strong indicators for a fraudulent ICO.

the biggest 'scams' in the history of cryptocurrencies

Many deceptive projects have silently taken the backdoor. Here is a list with the biggest scams in the history of cryptocurrencies.

  1. Bitconnect – Gained so much attention because it was one of the 20 most successful cryptocurrencies before it crashed on the 17th of January in 2018. It was intended to be a Bitcoin loan marketplace and gained investors of interest rates up to 1% per day. Bitconnect was officially declared as a Ponzi scheme by the Texas State Security Board.
  2. Centratech – Initially supported by celebrities like DJ Khaled or Floyd Mayweather. The idea was to create a VISA and Mastercard Debit card service to directly exchange fiat money into cryptocurrencies. Both founders were arrested and heavily alleged by the Security Exchange Commission (SEC).
  3. Pincoin & iFan – In terms of investment volume the biggest scam in the history of cryptocurrencies. A company running its business in Vietnam managed to get over 660 million dollars with two fake ICOs. They pretended to build an advertising and investment p2p marketplace.
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