{"id":127380,"date":"2020-12-06T12:14:00","date_gmt":"2020-12-06T09:14:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/did-you-fall-for-it-13-ico-scams-that-fooled-thousands\/"},"modified":"2020-12-06T12:14:00","modified_gmt":"2020-12-06T09:14:00","slug":"did-you-fall-for-it-13-ico-scams-that-fooled-thousands","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/did-you-fall-for-it-13-ico-scams-that-fooled-thousands\/","title":{"rendered":"# Did you fall for it? 13 ICO scams that fooled thousands"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a326bcd75a72\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a326bcd75a72\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/did-you-fall-for-it-13-ico-scams-that-fooled-thousands\/#ICO_scam_categories\" >ICO scam categories<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/did-you-fall-for-it-13-ico-scams-that-fooled-thousands\/#So_whats_the_biggest_ICO_scam\" >So what&#8217;s the biggest ICO scam?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Did you fall for it? 13 ICO scams that fooled thousands <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjAtMTIvZmYxODMyMjUtNGZlYi00MjM3LTkwMjQtZDg1YjRhZDNkZDA0LmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>Using blockchain <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a>, initial coin offerings have become an alternative means of acquiring funding for business projects using the new, evolving digital financial market for tokens. In contrast to initial public offerings, which are governed by strict legal regulations, ICOs require only a white paper and some interesting features, such as a lack of barrier to entry, a scope for exponential growth, absence of geographical barriers and easy validation.\u00a0<\/p>\n<p>Hence, it may not be surprising that the ICO market experienced extraordinary growth recently. <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"http:\/\/rfssfs.org\/forthcoming\/initial-coin-offerings-financing-growth-with-cryptocurrency-token-sales\/\">Research<\/a> shows that from January 2016 to August 2019, ICOs raised nearly $13 billion worldwide.<\/p>\n<p>Despite the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ealing benefits of ICOs, investors interested in them as an alternative investment face some dramatic risks. In this regard, a 2018 <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/research.bloomberg.com\/pub\/res\/d28giW28tf6G7T_Wr77aU0gDgFQ\">report<\/a> from Satis Research Group investigated approximately 1,500 ICOs. From the sample, 78% projects were identified as scams, collectively valued at $1.3 billion.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Crypto Crimes Rated: From the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Twitter<\/a> Hackers to Not Your Keyser, Not Your Coins<\/em><\/strong><\/p>\n<p>Together with my colleagues Niranjan Sapkota and Josephine Dufitinema, I conducted a <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/www.researchgate.net\/publication\/345998711_How_much_are_we_willing_to_lose_in_cyberspace_On_the_tail_risk_of_scam_in_the_market_for_Initial_Coin_Offerings?_sg=F3f-rY5rnhYMSBULiTzdzcFLJtYIZfW9YN42PSeU7IqYJjBhNiSaTtFy5IaFzSL6G_J26pYnphV-W2VyIE-4T3iyeqLgJ5brYAcOd9B6.no_WQhHNKLOmyKFzwi7CbLw49TBCwVsV4FH34QGU9eelr49Gr3QNvcxoqhuU2lnKyLa9L9b4qkAjna_Pg98Wrw\">study<\/a> that was aimed to explore and answer the following question: What are the various types of scams in the ICO market, and what is the expected monetary loss of the average ICO scam? To investigate this issue, we employed web-scraping and created an intensive data library covering all ICOs launched from August 2014 to December 2019. Our unique, hand-collected data set covered 5,036 ICOs. <\/p>\n<p>We found data of the funds raised for 1,014 ICOs, 576 of which turned out to be scams, totaling $10.12 billion in cumulative losses. The largest loss via scam is the so-called \u201cPetro-scam,\u201d from which investors lost a total $735 million.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"ICO_scam_categories\"><\/span>ICO scam categories<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>Dead, fake, or both<\/strong><\/p>\n<p>We retrieved ICOs that had been categorized as \u201clisted\u201d by dead-project aggregators DeadCoins and Coinopsy, and analyzed them to identify 13 different ways that investors can be fooled by scammers. If a Bitcointalk forum member identified the ICO with a fake team, fake project, fake wallet, fake social media or fake trading, we categorized the ICO as \u201cfake.\u201d <\/p>\n<p><strong>The classic exit scam<\/strong><\/p>\n<p>If an ICO failed to pay out promoters who were promised financial rewards (mostly in the form of tokens) for PR activities such as promoting the project on forums, Telegram channels, messengers, translating and localizing documents, posting on social media or on blogs, we categorized it as a \u201cbounty scam.\u201d If the developers and promoters who collected funds for an ICO suddenly disappeared while leaving investors without any information, we categorized those ICOs as an \u201cexit scam<strong>.<\/strong>\u201d<\/p>\n<p><strong>Compound scams and exploding airdrops<\/strong><\/p>\n<p>We observed many ICO scam accusations in which the same group of developers was actively conducting scams in other projects. This type of scam is categorized as \u201cprevious scammers\u201d in our study. Next, we defined \u201cairdrop scam\u201d for incidents in which the scammers stole private keys from users. This can happen if scammers create a booby trap and users, expecting to receive free tokens, click on the links, thereby giving away their private information and ultimately losing their coins.<\/p>\n<p><strong>Exchange scams and the copy-pasters<\/strong><\/p>\n<p>Furthermore, developers intending to deceive investors seemed to prefer launching their ICO at a fraudulent exchange. This type of scam is categorized as an \u201cexchange scam.\u201d We also observed that copying the white paper of a promising ICO and launching it using a similar or different name is another deceptive tactic used among scammers. This type of scam is categorized as \u201cwhite paper plagiarism scam.\u201d In this regard, we have observed that users are fortunately getting familiar with this type of scam and now report it in the Bitcointalk forum.<\/p>\n<p><strong>The pump and dump<\/strong><\/p>\n<p>\u201cPump and dump\u201d is another strategy used by scammers, but it is not always immediately detectable at the beginning of an ICO. In this type of scam, investors and traders rush to buy the token at an early phase when the price is still low, and some even buy at a high price in fear of missing out on an opportunity to make an easy profit. Once the scammers complete the sales, the price drops abruptly and dramatically.<\/p>\n<p><strong>Crypto Ponzi schemes<\/strong><\/p>\n<p>A \u201cPonzi scam\u201d is another category of scam observed. This type of scam typically requires that the victims invest in some product(s) or service(s) associated with the ICO and are promised returns at a later stage.<\/p>\n<p><strong>URL scams and phishing <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/trip-and-travel\/\" data-internallinksmanager029f6b8e52c=\"10\" title=\"Trip &amp; Travel\" target=\"_blank\" rel=\"noopener\">trip<\/a>s<\/strong><\/p>\n<p>We also observed a new tactic of scamming investors that involves the launch websites that are similar in name and design to existing projects. Naive investors that are unaware of the original websites may be fooled by these sites and lose their coins. This category of scam is identified as a \u201cwebsite scam\u201d in our study.<\/p>\n<p><strong>We know what you did last night<\/strong><\/p>\n<p>We also observed what we describe as a \u201cporn scam,\u201d which seems to be increasingly popular among scammers, whereby an ICO pretends to offer premium access to its porn site (and\/or products). Scammers may be employing this type of scam because users are less likely to report it due to pornography being prohibited or looked down upon in many countries.<\/p>\n<p><strong>Market manipulation and pre-mines<\/strong><\/p>\n<p>Next, we defined another form of fraudulent ICO as a \u201cpre-mine scam,\u201d referring to tokens being shared among developers and\/or promoters after the final token sale took place instead of burning the unsold tokens as is appropriate in such cases. This scams investors simply because a higher token circulation supply implies a lower token price. Furthermore, the token\u2019s market can be manipulated if developers retain a large portion of the tokens from the pre-mining phase. Interestingly, another recent study also <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/www.tandfonline.com\/doi\/full\/10.1080\/00036846.2020.1752903\">found<\/a> that pre-mining activity is linked to cryptocurrency defaults.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"So_whats_the_biggest_ICO_scam\"><\/span>So what&#8217;s the biggest ICO scam?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Our screening showed evidence that the \u201cphishing and fraud\u201d type of scam is the most common, whereby users receive spam emails, suspicious links and popups, questions for personal and financial details, errors on withdrawals, pending withdrawals, balances disappearing from wallets, and other dysfunctional operations.<\/p>\n<p>Finally, using our plug-in estimator, we found that if an ICO business project turns out to be a scam, we can expect an estimated $54.1 million in losses, which is three times the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a> sample average of $17.58 million.<\/p>\n<p>Summing up, due to a lack of regulation, developers and\/or promoters can employ more than a dozen tactics to fool investors. The money involved in this new, emerging market is overwhelming. We argue that our findings have significant implications, including the need for ICO market regulations from governments and regulatory agencies to protect investors from severe losses.<\/p>\n<p class=\"post-content__disclaimer\"><em>This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.<\/em><\/p>\n<p class=\"post-content__disclaimer\"><em>The views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n<div>\n<div style=\"background: rgb(239, 239, 239); border: 1px solid rgb(204, 204, 204); padding: 10px;\"><strong>Klaus Grobys<\/strong> is a docent in financial economics at the University of Jyv\u00e4skyla and an assistant professor of finance at the University of Vaasa. Grobys is also affiliated with the research platform InnoLab at the University of Vaasa. His recent studies investigate the opportunities and risks associated with new innovative digital financial markets. His recent research was, among others, covered by U.S. business magazine Forbes.<\/div>\n<\/div>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener noreferrer\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/did-you-fall-for-it-13-ico-scams-that-fooled-thousands\" target=\"_blank\" rel=\"noopener noreferrer\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Did you fall for it? 13 ICO scams that fooled thousands &#8221; Using blockchain technology, initial coin offerings have become an alternative means of acquiring funding for business projects using the new, evolving digital financial market for tokens. In contrast to initial public offerings, which are governed by strict legal regulations, ICOs require only&#8230;<\/p>\n","protected":false},"author":1,"featured_media":127381,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/s3.cointelegraph.com\/uploads\/2020-12\/ff183225-4feb-4237-9024-d85b4ad3dd04.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,74894,74863,75036,76255,117,61514,71101,4965],"class_list":["post-127380","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-blockchain","tag-cryptocurrencies","tag-ico","tag-study","tag-business","tag-research","tag-scams","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/127380","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=127380"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/127380\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/127381"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=127380"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=127380"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=127380"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}