Image: Screenshot
With the cryptocurrencies sector being only lightly regulated and fraudulent ICOs being uncovered frequently, caveat emptor is the rule of the game for any potential investor. It is, however, difficult to judge the quality of an ICO that you come across when you don't know what the difference between a good and bad ICO is.
The Securities and Exchange Commission (SEC) launched its own fake ICO website to educate the public about how to spot fraudulent ICOs. Check it out here.
They focus on a few types of red flags:
- Claims of high, guaranteed returns
- Celebrity endorsements
- Claims of SEC Compliance
- Pay with a Credit Card
- Pump and dump offers
More Red Flags
I think we can add a few more to the list:
- Poorly written white paper that is scarce on details (technical or otherwise)
- Untrustworthy team
- Holes or problems in the business idea
- Aggressiveness towards those who question the premise and soundness of their business idea or ICO.
Any other suggestions?
Haha.. the HowieCoin is quite funny. I also wrote about ICOs and common red flags in one my posts a few months back.
Thanks for sharing!
Thanks for sharing your post! "Their idea doesn't really need a blockchain." is a really good red flag. A lot of projects out there do not tap on the potential benefits offered by a decentralised ledger and are simply implementing a blockchain system to capitalise on the hype, without regard for the extra computational cost!
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