Blind pools are a type of financial vehicles used by companies to fund their operations. This is an unregulated, unsubstantiated version of an IPO. One key feature of blind pools is that the public never really knows what the funds are gonna be used for. You are essentially handing them a blank check where they are free to use your life savings for whatever purpose they see fit.
Blind pool scams are usually orchestrated on penny stocks or low priced stocks. They lure investors with the promise of multiplying their investment exponentially once the price of these stocks skyrockets. Investors risk losing their money despite the lack of information, lack of assets backing up the company and lack of regulation all because of the promise of instant wealth.
This is what is happening in today's ICO market. ICO in itself is NOT a scam. However, as technology evolves, so too are the means by which people orchestrate scams.
Here is an example of an obvious scam ICO:
It is trying to lure investors with the promise of guaranteed income with zero-risk. Those that have read investment books know that no legitimate investment medium has zero risks. These scammers are banking on the fact that majority of the population don't read financial books and simply want instant wealth. Nothing on their advertisement states whatever the f*ck they do. All its composed of are buzz words designed to hook you into transferring all your Ethereums.
Not all scams can easily be debunked at face value. Some go to great lengths to write whitepapers, fake linkedin accounts and photoshopped images that add credibility to them. And let's face it, a great portion of cryptocurrency investors don't bother to investigate. And the scam artist makes a good job of appearing legitimate to prevent you from doing so.
*''These pools are usually more prevalent in prosperous times - and times have been prosperous for a while''*
--Barbara Berger Opotowsky commenting on the surge of Blind Pool Scams in the 90s.