The effort to combat scams in the cryptosphere got a boost with the recent announcement by a startup that it has set a mechanism in motion to investigate and list all scam ICOs in the industry.
The firm, Cryptoinfowatch is a review and crypto news company that has its eyes set on investigative aspects of reviews of recent initial coin offerings with the aim of sifting out scams and warn investors about them.
The preponderance of scams especially among project teams posing as startups these days has been a source of concern to the industry with regulators working round the clock to find ways of combating the menace without limiting stifling the genuine blockchain startups.
According to the company CEO Chuks Jiofof, Cryptoinfowatch has put together analytical research and investigative system that would enable it run comprehensive background checks on newly announced initial coin offerings to ascertain that they are not just attempts to steal people’s digital currencies in the guise of public sale of tokens. According to jiofof:
“Our emphasis is to ensure that we scrutinize as many newly announced ICOs as we possibly can using resources available to us. In recent months, we have seen quite a number of exit scams succeed because no one paid close attention to obvious red flags that would have made it plain to the community that these are scams. This is what we intend to ameliorate by deploying digital forensics in evaluating these ICOs”
Ways of Identifying Scam ICOs
Jiofof stated that scam ICOs, no matter how painstaking they have been, always leave some trails that if followed and studied carefully makes it obvious that they are fraudulent.
“Issues such as opacity, plagiarism of any form, poor web copy, and failure to pass KYC are all pointers that investors should be careful with the project. We have witnessed projects using photos pulled from the web as team profiles and others presenting unrealistic whitepapers. These projects scam people because enough investigative reviews are not done in the ecosystem”
The firm also said that one of the weak points of due diligence is the inability of investors to cross-check a project by doing simple reviews. The release stated that it should be obvious to investors at this time that if a project is promising outrageous returns on investment, it is a pointer that they are just interested in getting investors’ coins.
It has already commenced listing some of the scams projects on its website despite the low activity witnessed in the ICO sphere. The company is confident that the low phase in crypto and digital currency activities will be short-lived.
“We are aware that scam activities in the industry fluctuate based on vibrancy of the market and awareness of investors about these threats. 2019 will be a stabilizing year for the industry in terms of regulation and maturation. Scam ICOs will also innovate with the times so all hands should be on deck to ensure that investors are furnished with appropriate education to minimize fraud in the ecosystem”.
A study conducted by Satis Group, the ICO advisory firm, reported that 80 percent of all ICOs conducted since 2017 have turned out to be scams. This is a disturbing figure which the firm arrived at based on the life cycle of projects promoted by teams that used them to raise funds.
Scams More Difficult to Detect
“ICO scams are getting more sophisticated and some may actually be difficult to spot, but the best precautionary measure investors could make would be to conduct proper due diligence before investing”
said a spokesman for the firm.
In the early days of initial coin offering, all investors needed was a well-written whitepaper that set out the vision of the team and how it planned accomplishing it. These days with the popularity of digital currencies, scammers have learnt all the processes involved in ICO and how to convince investors to send them cryptocurrencies.