A few parameters from the FBI for avoiding ICO scams

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Initial coin offerings (ICOs) have painted many headlines over the past two years. As the regulatory hammer came down in 2018, many of those headlines turned negative. At this point, ICO fraud awareness has become increasingly important.

FBI insight

The Paypers, an independent payment industry information and news source, recently posted an interview with Federal Bureau of Investigation (FBI) financial crimes investigator Steven M. D’Antuono.

In the interview, D’Antuono elaborated on fraudulent ICOs, as well as how to pick them out from the crowd. He mentioned corrupt ICOs often promise more than they can deliver. Advertising outlandish profit returns might be one example, as Bitconnect displayed before its 2018 exit.

D’Antuono also referred to potentially fake team credentials and members, as quoted in the Paypers interview.

The fraud scheme may vary, but some of the consistent threads running throughout most ICO scams are misrepresentations regarding the principals’ experience, misrepresentations regarding industry’s interest in the ICO, and misrepresentations regarding the coin’s probable rate of return. Like any investment product, rates of return can never be guaranteed and if it sounds too good to be true, it probably is.”

Mr. D’Antuono noted the importance of investor research, stating possible buyers must look into projects and their intentions, as well as the teams and promoters behind them. Investors should also statedly investigate projects’ legal implications based on location, and be skeptical if a prospective ICO is entirely web-based.

Based on the profit potential, ICO scams reportedly are still prevalent. D’Antuono and the FBI are making strides against such action. The crime investigator did, however, express the importance of being informed.

While the FBI and other law enforcement and regulatory agencies are actively trying to eliminate the scams and bring the scammers to justice, there seems to be a lucrative market for the scammers, meaning they continue to appear. Perhaps our best tool in mitigating fraudulent offerings is getting information out to the public that they need to be careful prior to investing in these projects.”

ICOs: a fraudulent front

The past two years have indeed yielded seemingly countless ICO scams. Bloomberg found more than 80% of ICOs to be fraudulent, leading up to its  July 2018 report on the subject.

The latter half of 2018 saw the U.S. Securities and Exchange Commission (SEC) start cracking down on projects that it felt opposed regulation. Airfox and Paragon, two ICOs from 2017, faced repercussions from the SEC for failing to register appropriately, according to an SEC press release from November 2018.

A website called Dead Coins even exists to show all the dead cryptocurrency projects, as well as those that turned out to be scams.

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