It no news that 75% of cryptocurrency lovers have 20 – 30% knowledge of what blockchain is and how it works. And that’s why they fall for rampant IEO, ICO, scams.
Bulliscoming have discovered that the GREED at which people want to earn cryptocurrencies for Free, or getting them twice as cheap compared to the current cryptocurrency market cap is also a major cause of crypto frauds.
Just like the past investigation we did that exposes how a set of the anonymous team set up an ICO campaign, impersonate respected individuals, and then, lured the public to buy their fake token, and currently, they have abandoned their ICO project leaving their investors with the worthless tokens, so if you have in any way a partaker of their presale, then you have been played.
Full details: TronUSDT Fake Token and Investigation – Bulliscoming
A report from Techcrunch.com has revealed that the government is now cracking down on fake token sales.
Take, for example, Operation Cryptosweep. According to a North American Securities Administrator’s Association, regulators in the US and Canada are looking into 70 token sales and maybe taking action against as many as 35. They write:
NASAA members from more than 40 jurisdictions throughout North America participated in “Operation Cryptosweep,” which to date has resulted in nearly 70 inquiries and investigations and 35 pending or completed enforcement actions related to ICOs or cryptocurrencies since the beginning of May. NASAA members are conducting additional investigations into potentially fraudulent conduct that may result in additional enforcement actions. These actions are in addition to more than a dozen enforcement actions previously undertaken by NASAA members regarding these types of products. Many NASAA members also are conducting public outreach initiatives to warn investors in their jurisdictions of the risks associated with ICOs and cryptocurrencies.
Understanding ICO, IPO, IEO, and Presale Token
I want to bring to your notice that participating in a presale token doesn’t mean you are buying a share of ownership in that company, you are actually buying a unit of currency for that project. and even though it’s tied to the value of the company, it’s not an actual share.
The lack of regulation of cryptocurrency presale token comes with greater opportunities to make an investment but also more risk because the legitimacy of the company is not always certain.
Kindly watch the explainer video below that deals more with understanding ICO, IPO, and presale token.
5 Ways to Detect A Cryptocurrency Scam Token Presale
Anyone can create and name token especially creating a fake version of existing token to influence presale. Nevertheless, with these five tips, you will be able to spot fake crypto tokens. tips:
- Get to know the project team
- Whitepaper Authenticity
- Holders of the Token
- Do they have an MVP (Minimum Viable Product)
- Feasibility of the project
Now, let go into these tips in detail so that you will be able to get a picture of the information that am trying to pass across.
Get to Know the Project Team
Who are the people behind the project, if they are anonymous without a profile of who they are and where they came from then it is a sign of a scam project.
And from bull is coming investigation 99% of fake token team are anonymous, with no trace of who they are, or where they are located.
This is to alert that they don’t want to leave a trace mark so as they don’t get busted.
Every ICO, IEO, IPOs must have a whitepaper. The whitepaper is meant to educate investors of what the project is all about, the goal, vision, mission, token total supply, and roadmap should be made known in the whitepaper.
The first step toward analyzing a whitepaper is to read it very thoroughly. Check to see if the whitepaper has complimentary resources as well, including financial models, legal concerns, SWOT analysis, and a roadmap for implementation.
Projects that don’t offer whitepapers should be avoided at all costs. Although, it’s possible for a fraudulent company to put forward a convincing whitepaper.
As was the case with PlexCoin;
This company managed to raise over $15 million before the U.S Securities and Exchange Commission (SEC) stepped in to shut it down.
A whitepaper should answer all of the questions a potential investor might have about what sets this particular project apart from its competitors, how it aims to be successful, and the measures it will take to achieve its goals.
Holders of the Token
Fake tokens are characterized by having a few holders, and mostly linked with scams via telegram bots airdrops, and presale through Google forms. And most at times, this fake token resembles tokens that are already trading, because they tend to mimic the original token so as it doesn’t look too fishy in the eyes of investors.
Do they have an MVP (Minimum Viable Product)
90% of today’s presale token scams doesn’t have an MVP, and during listing on an exchange most exchange platform recommend a project to present an MVP during application.
A minimum viable product means a product that usually has one basic set of features. It is released to a handful of people to test a new business idea and gauge people’s or your potential customers’ reactions to it.
Feasibility of the Project
The feasibility of the project has to do with Transparency. Nobody wants to invest in a project that what is said is not what is done.
- Are they biting more than they can chew?
- Is it too good to be true?
This are the kind of questions you should be seeking to get a vivid answer.
So, how feasible are the project roadmap, team, and all about it? Go for companies that aim to keep potential investors up to date with regular, detailed progress reports on a company website or on social media.
It’s also useful to look if a company has a timeline for what has taken place in the development process, as well.
This article is put forward for the cryptocurrency investor looking to make the most of the host of new investment opportunities while remaining safe from fraudulent ICOs and sketchy coins and tokens, the prospect can be daunting.
Blockchain and cryptocurrency technology is developing at a rapid pace, and even experienced investors may find it hard to keep up with the terminology.
While there’s no guarantee that any cryptocurrency or blockchain-related startup will be legitimate or successful, the steps outlined above can help you to be as sure as possible that you’re not falling for a scam.