Apparently, monthly return, thousands of investors showed up to plunk down cash for the new coin.no one saw it coming. A new cryptocurrency token called Pincoin was unveiled last year in Vietnam. After hearing the promise of a 48 percent
If it seemed too good to be true, it was. By April, Pincoin's mysterious operating team disappeared with the purported $660 million raised during the ICO (or initial coin offering, the crypto world's version of an IPO).
If the numbers are real, this will be the biggest scam to rock the industry since the beginning of blockchain.
Unfortunately, scams like this one are not uncommon. The blockchain industry remains partly unregulated, which means any group of scammers could conceivably create a high-quality website and whitepaper, collect cash, and disappear.
Want to protect yourself from the next big scam? Here are three ways to tell if an ICO is not what it seems.
1. No team to back up the project.
One big red flag on Pincoin's website was the lack of any human presence. You can't find any personal information and only find a couple of email addresses at the bottom of the site addressed to "Admin" and "Support."
If you're considering investing in an ICO, take a closer look at the venture's website and social media presence. Is the team clearly introduced? Do they have a real presence on social media (like Facebook, Twitter, and LinkedIn) long before the startup was founded?
If you can't find a team page or the descriptions seem phony, you may be dealing with a scam.
2. The whitepaper doesn't make sense or is incomplete.
The next step in the search for a scam is to read the whitepaper carefully.
Fake whitepapers tend to gloss over details, listing big ideas and goals with no step-by-step plans to achieve them. They may cite big numbers without proof or links to verify them. These whitepapers also can be poorly written.
An example of this is the whitepaper for iFan, another token that was later revealed to be part of the Pincoin scam. The whitepaper touts a new social network to support artists, athletes, and performers, but gives no actual details of how it will realistically collaborate with record labels, event planners, and fans.
It also lists mind-bogglingly unrealistic goals such as building a blockchain academy by 2019 and a Netflix competitor by 2021.
Watch out for whitepapers like these that are all talk and no action.
3. Website is all flash and no substance.
Why are scams so difficult to spot? Because many look good at first glance.
Compared to the difficulty of creating a promising business model, building a team, and developing blockchain technology, building a good-looking website is easy as pie.
This is the first tool scammers turn to when they want to fool investors into parting with their money. It's easy, cheap and makes them look trustworthy.
Fortunately, they often leave obvious clues throughout the website that you'll easily notice if you're paying attention.
Look for big claims like "the best XYZ" or huge user numbers with no links or sources attached to them. A lack of human presence, as I've already mentioned, hints at a scam, as does an overly abstract whitepaper.
If you feel like the entire website is unnecessarily flashy with no real substance, you've found a prime candidate for a scam.
No one wants to fall victim to a scam. Instead of following your first impression, take a closer look at the details to save yourself (and your money) from a bogus ICO.