ICO (Initial Coin Offering) is the attraction of investment with the sale of a certain number of new cryptocurrency coins to investors, obtained through accelerated or one-time generation.
The constant development of blockchain technology and digital currency has paved the way for promoting ICOs as startups with a quick way to raise resources. But the lack of control and regulation has allowed fraudsters to make their way into the ICO sphere. Therefore, it is not easy for investors to keep track of cryptocurrency promotion events.
ICO Fraud
Scammers quickly adapted to the ICO system and, seizing the opportunity, began creating fraudulent schemes that do not provide for fulfilling their promises.
Fraudsters often complicate matters, so they create marketing companies with fake team members, spreading fictitious information to attract naive investors.
Several characteristics invented by scammers can be highlighted:
- lack of transparency regarding the project team's composition and goals, in most cases, fraudsters do not disclose their identities, providing general information, which does not allow for an objective assessment of the reliability of such people;
- they create projects where it is not always possible to understand what product is being discussed, and they do not provide a development plan, a truthful ICO is always equipped with a specific plan and development stages, ensuring growth achievements in the set goals;
- presence of information on high returns with investment offers is one of the schemes, if an ICO talks about unreal profits in the shortest time, one should be wary and think about the longevity of the proposed project.
Fake Investments
Fake investments are deals that do not have a specific definition of buying or selling cryptocurrency, but agreements are made to introduce price changes in the markets. Such actions are created for the artificial growth of cryptocurrency and to increase its value and benefit. In most cases, fake investment deals allow increasing volatility artificially, thereby increasing risk for the investor and decreasing their trust in cryptocurrency exchanges.
Due to the large influx of fraudsters on financial sites and cryptocurrency trading platforms, many investors have become disillusioned with investments, so they are very cautious with each cryptocurrency transaction.
At first glance, it is difficult to determine which investment deal might be fake, although there are several indicators to consider:
- an unusually large number of trades;
- unexpected price changes without prior news or significant changes;
- appearance of activity on the exchange during specific time frames.
Before starting work on a cryptocurrency exchange, it is necessary to study this market and learn to distinguish fraudulent investment schemes from real ones. Thus, fraudsters offer cryptocurrency cheaply, lowering the price by approximately 10%, but at the same time promising high savings with incredible profits. Then scammers demand high initial payments, gradually increasing them, although everything is arranged so that the investor will not be able to withdraw their funds.
Scam Projects
One of the known projects is scam trading, its goal is to carry out a fake trading strategy, during which the trader buys or sells securities with the aim of filling the market with false information. Sometimes scam brokers and scam traders join forces to conduct fictitious deals. Such projects are meaningless, they replace each other and carry no value.
Another well-known method of deception is fraudulent brokerage, where a scammer poses as an experienced broker to a potential investor.
A truly legitimate cryptocurrency broker acts as an intermediary between financial markets and investors. However, a fake broker assumes the identity of an already registered one, allowing them to convince investors of their legitimacy, and the investor, trusting them, transfers money to the specified accounts for investment.
Understanding this scheme is not always easy, so when the deception is discovered, the scammer has already disappeared without a trace. Meanwhile, the legitimate broker is unaware that scammers have used their profile for fraud.
Crypto Investments
Crypto investments are financial digital assets, which can be tokens or cryptocurrency, with the main goal of generating profit.
To start the difficult path of crypto investing, you should register on the official exchange website to conduct investment actions to begin the process of earning on cryptocurrency and adhere to certain rules that will help avoid fraud:
- engage in self-education and study the crypto investment market;
- it is necessary to track the cryptocurrency rate to successfully identify suitable trading times;
- it is essential to secure your investments, two-factor authentication is necessary for protection;
- effectively manage risks and carefully assess your capabilities, large amounts should not be invested.