Welcome back to the Scam Logs. It’s time to explore once again some of the most common or dangerous scams in the crypto space.
Today, we’re talking about an older one: the ICO scam.
For those who do not know, an ICO is an “initial coin offering.” It’s a method of getting a new crypto off the ground by selling tokens for the developing currency to gather funding.
But what becomes a scam is when someone doesn’t go through with the whole process. They’ll convince people the cryptocurrency is legitimate, gather capital, and then at some point abandon the project and take what they can of the money. Because of the anonymous nature of cryptocurrency, it’s hard to track down the people who stole the money once they’re gone.
There are two ways to avoid this scam. One is to simply not get involved in ICO’s. You can’t be scammed this way if you’re not interacting with the scamming method. The other is to do your homework with an ICO. There are ways to help determine if an ICO is likely legitimate. Some ways are to examine how well documented the project appears to be and if they have proof of a working model.
Ultimately, and with a lot of these scams, the only way to be sure one is safe is to be educated enough on cryptocurrency to know if something sounds fishy. With an ICO, if what the developers are saying does not sound like it should be possible, then it might not be—and you need to tread carefully.
And that’s been this week of the Scam Logs. Check back soon to see our next villain: The Ponzi Scheme Scam.