If you willingly choose ICO, be prepared for the risks you’re about to take
Nearly 100 million dollars in cryptocurrency has been lost due to exit scammers’ imposturous actions when ICO tokens rapidly come down in worth.
Intrinsically, numerical information suggests that underhanded exit scams in two years managed to wangle in overall the sum of 96.8 million dollars. The data is true-to-fact in concordance with a report submitted by Diar blockchain intelligence organization. For the record, statistics have proved that blockchain startup companies have acquired more than 6.3 billion dollars from ICOs in only 2019 year.
To give an example, a Chinese company named Shenzhen Puyin Blockchain Group carried through a considerable part of all frauds, raking off 60 million dollars. The company mobilized investments for a number of various projects – ACChain, Puyin, and BioLifeChain – neither of which implemented.
A wide range of other cases comprises Cryptokami and NVO, either of which brought in 12 and 8 million dollars’ capital accordingly, not planning on realizing their projects. Cryptokami’s webpage now ceased to exist, and NVO hasn’t posted anything in Facebook since March.
A comprehensive list of fraud schemes is represented below:
The list includes LoopX, a company that mobilized a full sum of 4.5 million dollars and then disappeared out of sight with investors’ money, and blockchain-geared useless startup firm Prodeum, that got in headlines because of its impudent scam exit text.
Exit scams proceed to Infect ICO world while nothing can be done through regimentation to make sure the validity of the projects mentioned above because there is no lawful responsibility to deliver a product after you received funding. The cryptocurrency field may be compared to wild west when it comes to jurisdiction.
In broad lines, exit scams are not difficult to notice, but still, people are being cheated out of their money.
The revealing markers of dubious blockchain ICO include stolen visual information, feigned employee profiles, and utterly cribbed project document.
As Diar claims, the Wall Street Journal discovered that 19 present of all ICO’s has been using all the listed tricks.
It’s essential to note that probably the most dangerous ventures are those pretending to move forward; frauds assure people that the raised funding is being used, but still do not offer them any profit at all.
The Dior researchers examined the figures of the ten leading ICO’s whose token has been in the market for minimum six months. At the mean, their cost has descended by 93 percent from the consolidated token’s record high level. It may appear that the primary stage fraudulent activity hugely perverts the real price of these tokens, though when an ICO is closed, prices imminently come down.
Despite that, these figures should be met with tentativeness. Many of Twitter users say that the numbers enormously falsify the total figure of growth.
The table below shows that average prices have lowered 93 percent, though this represents record high-level value after the ICO. If we observe the upward movement or downfall of prices from ICO to present, instead of starting from a token record high level, the percentage alteration would seem quite normal.
Take into notice TRON, in spite of their present price is 92 percent lower than its record high level, it remains atop its ICO price – as well as Status.
It’s unsetting to realize that such enormous sums of money go to cheaters, whose only goal is to collect the capital and go AWOL, not even thinking of putting their mighty projects into life. Unfortunately, the scamming algorithm grows into an awful habit. It consists of attracting capital, deleting the firm’s webpage, siphoning off the funding and vanishing into oblivion.
Everybody understands that the only way not to be fooled is being extremely careful while dealing with ICO’s. In a challenging world of cryptocurrency, I suggest going along with a well-known saying, “If it sounds too good to be true, it probably is.”