I'm always on the lookout for the next 'big thing' in crypto, the next great investment, or at least one as good as others I may have missed out on in the past (there were a lot). At the same time, I'm also looking out for the scams. There are way too many of those (still) and they're harder to spot now.
So, I've been seeing ads for AMFEIX all over the place (Coinmarketcap, Steemit etc.) and I thought I'd take a closer look at it.
The ads are for the "World's first blockchain fund," or so they claim. I'm not so sure about that, but it's marketing so no harm there. It's "managed by professional traders" with "average monthly returns over 20%." Ok, sounds awesome, but that raises some questions. If it sounds too good to be true it probably is, so more scrutiny is required.
I looked around for some reviews, but there are only a few, obviously paid, promotions.
The website and whitepaper were the next stops.
Nice looking website. It works well and has some nice action on it. The information is clean and straightforward. That alone makes it better than many projects I've looked at. There is a well-produced video. They clearly spent some money and effort on these basic details.
The whitepaper is similarly clean and explains in simple terms how the fund works and how to begin investing in it. No roadmaps or timelines (not necessary), but also no talk of the history of the fund or its founders.
Ok, here are the red flags to talk about.
The performance returns
This project falls under the category of a HYIP (High Yield Investment Program). Crypto has been rife with these for years. A HYIP is basically anything that promises or guarantees a rate of return that is much higher than traditional banking, financial, or investment products can get you. That doesn't mean it's a scam, but it does mean it's high risk. And scams use this vehicle all the time, so we have to have our guard up. It is usually driven by trading, a trading bot, or a mining scheme. In this case, AMFEIX is an investment in a fund managed by professional traders. You invest, they trade and take their fee from the profits, you get the rest. Ideally, anyway.
AMFEIX is smart about this. They are stating that they have average returns of over 20% per month, but it's important to note that they don't guarantee any particular number. Just like with any regulated traditional investment, they put out all the disclaimers - past returns are no guarantee of future performance, don't invest money you can't afford to lose, etc.
So, these are not guaranteed returns … but ... that's what they're marketing with so that's what people are expecting. It's not misleading advertising to me, but for some people it might be. They see "20% returns" and that's what they'll expect every month. AMFEIX is very clear that trading returns will fluctuate. Even daily. There will be loss days. But I can guarantee that some people will invest in this and complain about daily returns, small losses, unpredictable gains etc. And that's if it's completely legit.
If they did guarantee returns, it would be a much more serious red flag.
In this case, I've already seen a few comments from people that it must be a scam - "no traders could ever do 20% every month!" That's not exactly true. Good traders can be profitable on a regular basis. It depends on way too many factors to get into here. AMFEIX displays their monthly performance reports for 2019 on their website showing daily and monthly returns. They're mostly small gains, even tiny, but they're consistent and they add up.
Are they real trade returns? I don't know yet. A certain amount of data they provide can be researched. I'll follow up with more on that in a later post.
The team
Investors like to know who's running the project, who's backing it, who are the traders, who are their advisors, do they have a legal team etc. AMFEIX has a Team page on the website with 3 operations guys. That's it. But the most important people, the CEO, the traders, are completely anonymous.
Is that a problem?
For some, yes. Without knowing who is most responsible for the fund, nobody can be held accountable if something goes wrong. This has been the hallmark of many a crypto scam in the last few years. Once the game is coming to an end, the anonymous founders run off with the crypto and there can be no justice.
Just because these guys want to remain anonymous, does that mean it definitely is a scam? No.
I'm torn on this. Personally, I don't care who they are, as long as they produce results. Maybe Satoshi Nakamoto is doing the trading. Awesome.
But if AMFEIX wanted to step up the trust level, I would suggest this - find someone known in the industry, someone with credibility to vouch for you publicly as an advisor. Someone who can say "Yes, I know who these guys are. You can trust them, let them do their work." For me and many others, that would be satisfactory. As it stands now, there will always be a certain level of distrust because of the anonymity.
Is it regulated in any way?
No idea. They don't make any claims in that regard so assume it isn't. I'm not even sure where they are, but likely Singapore. Again, to me that isn't a problem except for the accountability issue. It's easier to trust something that has certain requirements to meet.
I'd hate to have to default to the government to determine whether something can be trusted, but AMFEIX doesn't offer an alternative, such as I suggested above. So, the bottom line here is that they must rank very low in the trust department. And again, that doesn't mean it's a scam, it just informs our decision-making process.
Some language issues
This is relatively minor, but something that has irked me for a long time. There are a few spots where the English is a bit rough, on the website and in the monthly Performance Reports.
Back in 2016 and 2017, crypto was a growing global industry using the only world language with truly global reach - English. But many projects (maybe most) were from countries whose native language was not English and some that were not traditionally known for fostering international businesses.
Because of that, inconsistencies with English were acceptable to a certain degree. We were looking for innovative technology and ideas, not polished business plans and slick websites. That's not so anymore. The 2018 bear market made everyone leaner and meaner. It doesn't take much effort to get the business materials fully global-ready with good language.
The monthly Performance Reports show what I'm talking about. They're very 2016 crypto, not 2019.
It looks like these reports were made by the traders themselves. Ok, that's understood. But this fund is moving around some serious money in their trades. They can afford to crank it up a bit and have those reports edited and cleaned up, as well as a few parts of the website.
These reports are an easy way to connect with their investors, engender trust, and earn some goodwill. It would be cool to see AMFEIX take that extra step.
So, what's my conclusion?
When I looked at what AMFEIX was doing, my first reaction was "Cool idea, if it works it's awesome." My second reaction was "It looks like a scam, though." What I mean is that it looks like one, not that it definitely is one. That second reaction is due to the many scams I have seen in the last several years, and it's actually a healthy reaction.
But just reviewing a website and whitepaper aren't enough. There's only one thing left to do.
Invest in the fund.
I can't tell you how (or if) it works unless I get in there myself and start poking around. See if I can get my money in and out. With profit.
The only question is how much to invest. What I invest in this would be risk capital. If AMFEIX ran away with my small investment the next day, I would be mad, but it wouldn't kill me. That should be the way we all invest, every day. We choose our own level of risk and act appropriately.
I'll follow up this post with another and share what I find - the signup process, getting money in and out, what it all looks like, how it works, and any research I do.
Cover me, I'm going in.
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