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The Bitcoin Job – When White Papers Create Millions

What a year it’s been! The Initial Coin Offering (ICO) market was valued at more than $6.8 billion in 2018 alone. However, an eye-watering $100 million was lost through ICO scams.

You’re certainly not alone, if you’ve fallen for such a scheme. The total ICO funding for 2017 summed up to $11.9 billion, according to a study by Stratis Group. While, an astonishing $1.34 billion (11%) went to scams. Pincoin (raised $660 million), Arisebank (raised $600 million), and Savedroid (raised $50 million).

These sums of money speak volumes. Many of these scams make their ideas seem plausible to pass due diligence.

Due Diligence?

The “team” (if any exist) expressed availability for investment to the general public — the announcement made through white paper and website publishing, announcement (ANN) threads, and social media posting. After the idea gains traction in the community, a contribution address is shared.

Soon, people start to realize that the project is a scam.

Pincoin’s ICO, for instance, successfully raised $660 million from 32,000 investors. The company distributed returns and cash rewards from their supposed profits. This was supposed to be the next bitcoin…

Once the token was issued, the Pincoin team disappeared, leaving behind a website and a lengthy white paper. Individual investors conducted investigations and realized that none of the information provided by the company, about the company itself and the team behind it, could be verified.

Show me your business plan!

The White Paper is the holy grail of successful crowdsourcing. The company has to justify raising funds for the project. Therefore, the team would ideally create a feasible plan that will break down how the team plans to achieve their goals. As an investor, you need to get to the root of the company and its business plan/white paper.

This research will help you learn the details about how the platform and token will work, what the funds will be spent on, the details of the project’s escrow wallet, and ICO advisors. Also, find out who exactly is running the project and conduct extensive research on the team including: finding their social media pages, googling their previous working experience to find out if they do exist (in case they used stock footage).

So, has the project passed all these checks? It’s time to go full-blown crypto-detective on the project.

Check whether the company exists using online business directories. Find out more about when it was incorporated and who its directors are.

Be Careful..

Cybercrime is already a lucrative business for virtual con artists. Con artists are very talented at using underhanded methods to dupe you to losing millions through scrupulous ventures. The best defense you could put up is by learning how to recognize scams. Raise your guard and be on the lookout for anything that looks suspicious.


sources:

https://research.bloomberg.com/pub/res/d28giW28tf6G7T_Wr77aU0gDgFQ

https://cointelegraph.com/news/vietnam-pincoin-ifan-icos-exposed-as-scams-that-allegedly-stole-660-million

https://www.bloomberg.com/news/articles/2018-12-12/arisebank-agrees-to-pay-2-5-million-in-sec-crypto-settlement

https://www.newsbtc.com/2018/04/20/savedroid-fakes-50-million-ico-exit-scam-community-outraged/

Last modified: August 15, 2019

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