Down Memory Lane on ICOs Scams

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2 years ago

An analysis by coindesk claims $6.3 billion was raised  through ICOs by the start of 2018. That seems to be a pinch of duration compared to the amount raised through ICOs the whole of 2017.ICOs are the hallmark of blockchain startups, but a number of companies have also not been left behind in the race. Securosys is one good example of a non-crypto company that issues ICO tokens. Other companies squeezing through the crypto sphere through ICOs are nothing but just fraud. Yes indeed, top-level scammers poised to take advantage of the wide pool of crypto investors.

The average number of scams has increased with dozens of cryptocurrency startups launching every day. The speculative nature of a lucrative cryptocurrency has lured increased investor appetite. Therefore blinding the ability to spot fraudulent tokens. The prospect to remain detached from fraud as an investor remains a daunting task. The knots are even more Sisyphean when it comes to cryptocurrency fraud stars. These scammers create fake biographies and invent sketchy claims on whitelists. Validating such claims would be quite a process for the novice investor. Even the most experienced investors are falling prey to such intents.TrueStory is an authenticator company whose aim is to validate blockchain startups claim and spot potential scams. It is possible that the startup can crack down frauds and bring back authenticity to the cryptocurrency community.

First of all before laying down the top biggest ICO scams in financial history. It is reasonable to define an ICO scam as an act that can only be proven after it has taken place. So how do you prove an ICO fraud? When the team behind an ICO collected investor offering and disappeared. It shows that the act was pre-planned and that it was a scam. Below is a list of the top seven  ICO scams.

#1.Pincoin Token Exit Scam

Techcrunch investigated perhaps one of the recent and biggest exit scam that stole from almost 32,000 people. Seven Vietnamese nationals lured the investors into investing a total of $660 million. The investors were promised a monthly interest rate of 48% from their first investment. The company also maintained that the investors would be allowed to recoup their entire investment amount after four months. Introducing a new member would also earn an investor another eight per cent commision. The company dubbed, ‘Moden Tech', left hundreds of investors camping outside its headquarters long after the founders had left the country.

The lucrative pincoin bonuses attracted investors to the tokens. The company also paid for a nice pitch website and an innocently looking investor solution whitelist. Until the beginning of 2018, investors claimed the company had been paying out well in cash. Around late January the firm invested in another token called iFan.It would then begin sending iFan tokens to investors. The iFan tokens are a social media token for celebrities. In the wake of March 2018, Modern Tech vacated from its offices leaving behind an unintelligible website. The once good-looking whitelist that would dance with investors lacks clear developer names.

It surprises that a number of scam directories had listed pincoin as a potential fraud. Behindmlm, a financial fraud directory had on February 2018 insisted on the suspicious nature of pincoin's buy-in method. The directory claimed the method was similar to many ROI Ponzi schemes that had occurred in the past.

Cointelegraph reference

Techcrunch reference document

#2. Savedroid $50 Million ICO Heist

Perhaps one of the most amusing yet rage-cuddling ICO scams in the world. The scammer, a German founder of the Savedroid company reached out to Twitter followers after fleeing with $50 million. Mr Yassin Hankir twitted ‘thank you' before departing the airport on 18 April 2018. Savedroid scammed investors a whopping $50 million after promising to design an artificial intelligence bot for managing user investments. The bot would be used along with a backed credit card.

Mr Yassin's appearance at major investor conferences gave investors the clue that savedroid was a well-managed company. The startup was also able to open multiple offices in Germany and appear on a number of events. The company did run for some months until the bubble blew. Yassin exited in style with an ‘Over and Out' message to all his fans. The company's website was left behind with a fancy image of a surprised cartoon and the words, ‘aaaaaand it's gone'.The scammer also posted a picture of a beer in the background of an easily recognizable beach coastline. A company claimed the location to be an Egyptian resort, whereas a number of enthusiasts expressed that the picture was only meant to throw pursuers off the trail. Techcrunch in a post dubbed  Another day, another $50 million ICO exit scam claimed that Yassin blamed the investors for losing money in a tweet that he said ‘Everyone that fell for his trick despite frequent warning signs should only blame themselves. reference

#3.Centratech  $32 Million Scam

Although the scammers behind the Centratech heist have long being arrested and charged for fraud, the scam seemed a lucrative opportunity for investors after being endorsed by DJ Khaled and Floyd Mayweather. The company promised Mastercard and Visa debit card services that would help users convert cryptocurrencies to fiat. Robert Farkas and Sohrab Sharma were charged for allegedly paying celebrities to endorse the ICO on Instagram, inventing a fabricated list of brilliant and impressive executives as well as using misleading promotional information to market the centratech tokens.

The ICO was able to raise an amount of $32 million. The wild intentioned founders were however nipped in the bud before they could disappear with the money. Securities and Exchange Commision (SEC) plans to force the duo into refunding stolen tokens to investors.SEC also added that the two founders would be barred from participating in any security offerings as well as serve in any company as officials or directors. If convicted the dual would earn a minimum of five years in jail.

The Federal Bureau of Investigations is said to have seized $90 Million worth of Ether from the Centra Tech team. According to Crowdfundinsider, Centra Tech's unregistered ICO kicked off on July 30, 2017, all the way to October of the same year. The tokens were also listed on approximately ten exchanges. The token had been selling for $6 during the first few days until the company decided to scam prices. At the time of Robert's and Sharma's arrest, a token was selling at $0.30.Were it not for the company's fraudulent scheme, it could have created the world's first cryptocurrency backed Mastercard or visa.

Crowdfundinsider reference,

#4.Onecoin Ponzi Scheme ICO Scam

Red flags had been waving since the inception of Oncecoin. The company was dubbed as Ponzi Scheme by the Indian government in 2017. Since then, it has been under a number of investigations. With a number of claimed offices, Onecoin was unable to prove its actual location. The company also lacked a decentralized virtual currency as it claimed, absence of a public ledger and its Bulgaria offices raiding. All these gave reasons and warning signs to be aware of the company. The Bulgarian government had raided the company's servers while the company continued to battle out cases with various prosecutions. In July 2017, the company was also fined 2.5 Million EUROs by Italian regulators. As if that was not enough, approximately $30 million worth of coin funds were seized from the company by Chinese authorities.

The company's claim to have been registered in Vietnam was slapped down by the Vietnamese government. A number of countries also shot up red flags against the company's tokens by warning investors. Some of the countries comprised of Finland, Bulgaria, Norway and Thailand.

Onecoin jumped into the world spotlight through its supposed centralized model. It claimed to protect user safety and ensure compliance with anti-money laundering policies. Experts claimed the company did not fit the description of a cryptocurrency. Especially the lack of open source software and the required decentralized blockchain. A Bulgarian Police report claims the company operates many affiliate companies on all five continents. Many times Cointelegraph has warned investors to desist from the coin.

 Cointelegraph reference

#5.Plexcoin $15 Million Scam

Plexcoin founder, Dominic Lecriox lured investors to a coin with potential to beat Bitcoin speeds. This was before the launch of Bitcoin Lightning network. Dominic influence was ingrained in the call that Plexcoin would serve similar needs as Bitcoin, only that it would be a hundred times faster than Bitcoin blockchain. The scam claimed to have affected two countries, USA and Canada raised over $15 Million.

The Canadian government fined the company's founder $100,000 for contempt of court. The fine also included a two-year jail sentence. According to a post by, Plexcoin had promised investors a X13 investments return. The U.S government also sought permission via SEC from a New York District Court to pursue Dominic Lecriox.SEC blames the company for allegedly luring investors with fake outlandish returns promises and misleading promotion. The case is the first of its kind to have been filed by SEC's cybersecurity unit.

The founder is still battling a case with a Canadian court. While still awaiting other court cases with the New York District Court.

Plexcoin's response to the New York case blamed the Securities Exchange Commission for engaging in a tremendous overreach. Dominic claimed the transactions had occurred beyond the boundary restrictions of SEC and therefore had no reason to pursue Plexcoin. The founder also claimed that the U.S citizens who had bought plexcoin token had done so illegally. He added that only after an individual had lied about their identity could they have purchased the tokens through a foreign exchange. ref

#6.Bitcard $5 Million Scam

Bitcard had an attractive bid to overhaul existing trading software, businesses, transactions and government. The lucrative nature of its ideal resulted in the collection of more than $5 Million in an ICO. Most experts will disagree that Bitcard's initial intentions were ill-motivated.Some experts believe the company lacked a definite way to negotiate through its plans. However, the bottom line is that the company vanished with the $5 Million. Allegations of a cryptic white paper and many obscuring inconsistencies in its site. Probably could have been the reasons that led to the company's shut down.

The company has been listed as fraudulent on almost all scam directories on the net. A single google search of Bitcard will reveal a plethora of pages citing the company as a scam.

Cryptotomorrow Ref

#7.The Benebit $2.7 Million Fraud

A scammer just wakes up one day, hacks a high school account and uses all boy photos to create fake LinkedIn profiles. It is a great way of course to invent a nice resume of developers; especially where the biographies and descriptions are sketchy and extra brilliant. Benebit scammers were going to offer credit card-like token points.

Although keen investors noticed the young age of the white paper's list of developers , the company managed to make away with more than $2.7 Million of investor money.

The supposed Benebit currency was meant to benefit loyal investors. The company had collected on its first year of operation, a sizeable amount of followers that reflected from its Telegram group. When the scam bounced to surface, hundreds of suicide prevention numbers also surfaced into the company's Telegram group. The victims took to group admins who they blamed for not having cracked down on the Benebit. It is however sad for the investor who invests on the basis of someone else' advice. Some of the admins, according to turned to blame the investors for failing to research prior to investing. ref

The Bottom Line

2017 reported the highest number of ICO scams. Of course, scams had been in existence before ICOs but increased spotlight on the crypto environment gave them an opportunity to surface more ferociously. Investors have lost millions of dollars to scammers. Identifying a potential scammer, even through intensive research is mostly next to impossible. It is, however, possible to wisen up and observe ICO trends before deciding to invest in a given ICO. Pile up book after book might not work in the postmodern world battles of ‘not to be scammed'

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Avatar for Richard-M-Adrian
2 years ago