NFT Scams: How They’re Hurting The Market
Read to be aware, learn new things, and know how to secure yourself from NFT scams.
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Even though ICOs are a comparatively recent phenomenon, they are one of the top-priority topics when it comes to the blockchain. Initial Coin Offering is a great fundraising mechanism for new projects; however, today it comes to decay as it has always brought up a hot discussion on whether it is simply a scam, a so-called bubble, or a progressive way to raise funds for unique ideas.
We will not deny, there have been quite a lot of cases when ICOs turned out to be a complete success and people were introduced to marvelous projects that change or will change the future. However, such projects are more of an exception than a tendency. Scroll down and get to know which scam ICOs shook the crypto world the most.
You have probably heard about this Vietnamese company that launched an ICO for its Pincoin token. Modern Tech’s founders managed to raise approximately $660 million from around 32,000 people and then, of course, successfully disappeared, having left the perplexed investors with a solid zero.
Here is how it all was planned: after Pincoin ICO they launched another one — iFan, which was a social network for all kinds of celebrities. Thus, in the beginning, all the Pincoin investors were receiving cash and then Modern Tech started to pay them out rewards in iFan tokens. That was the moment when seven masterminds (founders of the company) left their headquarters with no trace.
So how could have they pull this all off? One of the unique things of Pincoin ICO was that it was offering a pretty good bonus of 8% commission for investors who brought new people into it. They also promised a profit rate of 48% a month from investors’ initial investment. Sounds too good to be true? Of course, it does! However, a sophisticated website and various conferences that Modern Tech organized did not let the investors have the back thought that it might be a simply well-planned scam, as it turned out in the end.
PlexCoin was launched in August 2017 and was halted by SEC in December 2017. They were “offering” an astonishing return of 1,354% to the US and Canadian investors. Thankfully, all the $15 million that this ICO gathered were frozen and the company was fined $100,000. Yet, approximately $810,000 is still kept by the payment processing company Stripe and a lot of funds are stored in crypto wallets of Lacroix. As for now, it is not absolutely clear how they will be charged and what will happen to the money.
Due to the strong white paper and quite a good amount of money spent on marketing, Benebit’s team managed to lure investors into their ICO. They were stating that they use Blockchain to merge various types of customer loyalty programs such as frequent flyer miles and so on. Thankfully, some lucky people noticed that the photos and passport details of the founders were all fake, and that was when the scam was exposed. It is believed that frauds ran away with no less than $2.7 million.
Like in all those scams, people were investing because they truly believed that the ICO will bring them unbelievable returns. Initially, Bitconnect was launched as a loan program based on BCC referrals. As for now, the scam victims united and made a lawsuit against the company’s founders to turn back their lost $700,000.
Do celebrities have a big influence on you? Good if not! Unfortunately, famous people can impact a lot of people now and that was the weakness which Centratech’s founders successfully exploited. This ICO was meant to create a kind of a MasterCard and Visa debit card platform that would let investors exchange cryptocurrencies for fiat money.
You might be surprised but Centratech ICO was even backed by DJ Khaled and Floyd Mayweather (as if it should have mattered a lot). The founders managed to raise around $32 million, but fortunately, they have been caught and the scam was uncovered. However, they still have to return all the stolen money and interest.
Another big fraud that had a pretty impressive name, right? Nevertheless, the fact that its investors lost millions does not sound that impressive. This multi-level Ponzi scheme was exposed not only in India but also across Europe. The ICO turned out to not have a public ledger, nor an official license. Believe it or not, it is still operating in some parts of the world, even though Italian authorities fined it for 2,5 million euro and the Chinese for $30 million. As always, OneCoin gave only empty promises and came out as one of the biggest high-profile scams.
You are now probably asking yourself how one can be so gullible to invest money in an ICO with this name? Whether we want to admit it or not, there were a lot of people who believed it and let the project raise over $250,000 (and of course its founder walked away with all the cash). Note, that even on the ICO’s website it was written that it was a scam! Who is to blame here? You tell us.
A real ICO or just a prank? We will see! However, after having been introduced in 2014 as a platform for adult industry entertainment, the TITCoin has still managed to accumulate around $100,000 by mid-2017. As you realize now, even things that sound ridiculous attract people’s attention and can convince them to make investments.
There is no argue that ICO scams have created a lot of hype in the blockchain communities and it makes it hard for investors to have any trust in them. Nevertheless, we still believe in the bright future of cryptocurrency and want to note that not all ICOs are bubbles. As a proof, take Hacken, — the company has matured from an ICO start-up into a fully operating cybersecurity organization with our own products. Tomorrow, on November 15, we’re initializing token burn event as we accumulated 1% of total supply as a part of our revenue.
Do not think that every ICO will turn out as a scam, but instead, use common sense to study the crypto market before making a decision to invest your fiat or crypto money in new projects with genius ideas.
What other scam ICOs you know? Join our chat to discuss with other crypto enthusiasts!
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Case study: Hacken audited smart contract of PumaPay