Crypto world is a strange world. That's probably because it's still relative in its infancy and majority of people still don't really understand how it works, but doesn't want to miss out on the sick gains that they cannot traditionally get in other investable asset class when comparing in the same period span. This obviously led into a FOMO gold rush to the point that even non-investment savvy people (and everyone's grandma) are scrambling to get in. They start by using an app like CoinBase, which is probably ones of the simplest entry point to the crypto world due to their support of fiat deposit and the use of credit and debit card. The next natural progression is the ICO as people quickly find that if they were to be in the Ethereum ICO, they could have had a 185263% even at current price of $575.81 (as of Mar 17, 2018).
This is when scamming issue kicks in.
There have been many articles such as this one that aims to help newer investors understand how to not get scammed by an ICO that is created to just take your money. One of those in our recent memory is Prodeum, which left a single word, "penis", on their website and disappeared with the money. One may ask how is this allowed. Well, anyone can create their own tokens and start an ICO and it's your job to educate yourself and only invest in a project that will not disappear after the ICO (and has potential to get you that sick gain of course). There have also been attempts to protect retail investors by the the governments such as in China where they simply just ban ICO all together, but that obviously will not stop people from figuring out ways to do it. Even with KYC being enforced, people can still ask their friends who live in unrestricted country to invest.
Anyway, that's not really the focus of this article. People are getting scammed even in a LEGIT ICO. Sure there are a bunch of scammers out there trying to take away your hard earned money, but only you can be blamed for that. Here are the most common reasons people get scammed when trying to invest in a good ICO.
1) Read! God damn it.
Despite all the attempts by the companies trying to help people not get scammed, people still get scammed every day. The most common issue I have seen is that people simply don't read. Take an example of Telegram pinned post. You can pin them all you want, but there will still be some people who just don't read. If you go to any Telegram channel for ICO, you will find the most common questions are:
- Is the ICO still going on?
- Which exchange will the token be listed on?
- When moon?
- When lambo?
Considering the last 2 questions are simply dumb questions since even if they want to give you an answer, no one really knows especially when it hasn't even hit the market. The exchange question also cannot be answered due to regulation/NDA. BUT, the first question is probably even worse. First of all, if it's not going on, the website would say so. This just show the level of ignorance of some of the investors trying to get into ICO.
So you can warn them all they want about not sending fund to a random wallet address, some people will still do it. People need to get smarter.
2) Scammers are getting much more sophisticated
These guys are really out to get your money and there are just getting smarter and smarter. Here are some of the things that have been done:
- Faked website that looks exactly like the real website. Always double check the URL with second source such as websites that list ICOs such as ICO Bench
- Faked Telegram channel. Only trust the one mentioned on the official website. Some faked channel such as one for Coinvest ICO has 10k+ subscribers so number of subscribers is in no way a confirmation that you are on the right channel.
- Faked admin and direct message. If an admin contacts you directly asking if you have invested and provide you a wallet address, you know it's a scam. They typically steal the photo of an actual admin on the channel and change the Telegram handle by 1 character to make it subtle enough you sometime can't tell. My typical response these days is sending them a wallet address and ask them to transfer small amount of ETH to verify their identity. Then I block them. Scamming a scammer is not wrong, right? 😏😏
- Faked email notification. This is actually a major issue when it happens because it simply mean the website got hacked and they managed to get the email list. Never send any fund to a wallet address specified in an email.
So why did I decide to write this article?
In the past few weeks, I have been discussing about ICOs with many friends who are currently offering ICOs and they are all sick and tired of the preventable scam issues. The general consensus is that there are too many idiots in the crypto world who are lurking around looking for quick bucks. We all generally feel that for the crypto world to mature, investors must also become smarter. You simply cannot rely on ICOs being regulated by governments. For the first time (well, if you don't count equity crowdfunding), any average investors who are not accredited also have a chance to invest in these great companies right from inception. Do not ruin it. If you choose to not be smarter and educate yourself before investing, maybe you shouldn't be investing at all regardless of what asset class.
And god damn it. Stop with the bullshit "when moon?" and "when lambo?". You are all better than that.
Legal Disclaimer: I am not a financial advisor nor is any content in this article presented as financial advice. The information provided in this blog post and any other posts that I make and any accompanying material is for informational purposes only. It should not be considered financial or investment advice of any kind. One should consult with a financial or investment professional to determine what may be best for your individual needs.