The bulk of the markets in the financial sector is under the tight control of regulators, which helps to minimize the risks of encountering scammers. For this reason, savvy minds turn to innovative technologies in an economy. They are not subject to control, which today are represented by a cryptocurrency.
The main purpose of the attacker is to attract the interest of potential investors to his fake product and to stimulate investments in this project in the cryptocurrency equivalent or fiat assets.
A fraudulent project can be considered when there is evidence that all funds raised during the preliminary or main crowdsale have been stolen and the project team is not communicating with an audience. This indicates that the entire scheme of actions was planned in advance, and the theft was deliberate.
The Plexcoin project – loss of 15 million US dollars
The Crowdsdale system of Plexcoin was stopped in December 2017 by the decision of the Securities and Exchange Commission, or SEC. This was due to the filing of an official complaint, under which Dominique Lacroix was charged with fraud. The complaint dealt with Lacroix advertising an incredible profit of about 1354 percent, which according to experts from the SEC could not be obtained – this provoked a group of alleged experts to provide invalid data.
All company assets were frozen – amounting to $ 15 million. This amount was collected as a result of crowdsdale since August 2017. The founder of the project Plexcoin went to jail, and the company was fined 100 thousand US dollars. Until now, about 810 thousand dollars are on hold by Stripe, which deals with the processing of payment transactions, and the balance is placed in cryptocurrency depositories, owned by Lacroix. What kind of accusations will be made against Lacroix is unclear, as is the fate of the funds placed in the swindler’s wallets. At the same time, the Plexcoin project is one of the largest scams of fraud using ICO in the history of the existence of the cryptocurrency. Well, that all the beginnings of intruders were stopped.
The Benebit project – loss of 2.7 – 4 million US dollars
According to the developers of the Benebit system, the project is focused on the use of Blockchain technologies and work with digital coins to ensure the unification of various loyalty programs to users, while the main focus of the system was the air transport industry. ICO of this project was characterized by all signs of reality, including the presence of a live Telegram channel, which was counted more than 9,000 participants and there was an advertising budget of more than half a million dollars. Also, the Benebit company conducted a marketing campaign related to the organization of the pre-session of the token. Due to the innovative concept, mass advertising campaign and an impressive amount of money spent on the project, the Benebit system created around itself a stir and attracted the genuine interest of investors.
As a result, it was found that all the photos of the Benebit project team members were stolen by fraudsters from the UK university catalogs, and the passport data of the alleged founders of the Benebit system turned out to be counterfeit. After the charges were brought, the participants in the fraudulent Benebit project was engaged in the destruction of everything that has a connection with the false project: the documentation, the “official” site, the system account in social networks. According to experts, the amount of losses varies in the range from 2.7 to 4 million dollars – this amount of funds could be “taken away” by intruders from credulous investors.
The Opair and Ebitz project – loss of 2.9 million US dollars
The Opair and Ebitz systems were also accused of fraud, despite the fact that the founder of these systems, known as Wasserman, were not found by investors until now – the attacker was able to attract funds in the course of the ICO of these platforms in the amount of 388 Bitcoin coins.
The Opair system offered users work with debit cards within a decentralized environment and using their own XPO coin. The network participants found that the user profiles in the LinkedIn system were fake, as a result of which the Opair project with all the organizers quickly “evaporated”, and losses amounted to about 190 BTC tokens.
Amateur investigations, organized by investors who lost their funds during the crowdsale, allowed to establish that the Ebitz mail servers system redirected data to the Opair project domain – it was also recommended as a clone of the ZCash platform with minor changes. The founders of the project, calling themselves “a group of ethical hackers”, planned to attract at the ICO 500 thousand Bitcoin – the crowdsale was launched on November 28, 2016. Two days after the ICO started, the BitcoinTalk system participants discovered the fact of Opair and Ebitz MX connection. Instantly, the Ebitz site was disconnected, but in the course of the sail the attackers were able to collect about 2 hundred BTC before disappearing from sight.
The REcoin and DRC projects – loss of 300 thousand US dollars
The Real Estate coin systems, or REcoin, and Diamond Reserve Club, or DRC, initially demonstrated ambitious development plans and real prospects for projects. The main task of imaginary platforms was the creation of a cryptocurrency, backed by real estate and diamonds. Maxim Zaslavsky, the founder of these systems, stated that these startups were completely ready for operation: they had legal support, formed relationships in the retail and investment spheres, and were equipped with all the necessary tools for efficient work with assets. Unfortunately, none of the listed criteria met any of the systems.
According to the SEC, both REcoin and DRC did not provide an opportunity to conduct real operations in the event of distortion of investment indicators, the absence of their own tokens and connection with the Blockchain technologies. By decision of the SEC, which did not recognize ICO projects as valuable, Zaslavsky was arrested on September 29, 2017. He was fined 300 thousand US dollars, despite the fact that according to him, the number of funds raised during the crowdsale was more than $ 2 million.
The PonziCoin project – loss of 250 thousand US dollars
The PonziCoin Platform is real, and its token also exists. However, some trusting users lost their funds on the fact of investment in this project. It is interesting that the last marketed PonziCoin positions itself as the first legitimate Ponzi scheme in the world, and in fact is a duplicate. The first PonziCoin coin entered the market in 2014 with a project capitalization of $ 7 million equivalent. If we take into account the current asset rate, then it would be about 2 million US dollars.
The second PonziCoin system was launched in 2017 with the same address.
Initially, this project was created as a clone of the original and was a scam. This did not alert depositors who managed to invest its assets in the amount of a quarter of a million dollars – the funds were stolen after the open recognition of the fraud project.
What to consider before participating in the crowdsdale
Since the activity of fraudsters in the organization of ICO is quite active, rush around digital assets and time deficit, investors often make ill-considered actions and lose their money invested in the “wrong” project. Any decision regarding the investment of funds should be taken on a “cold” head and carefully analyzed – this will avoid the loss of assets.
Before taking part in the ICO of any cryptocurrency, it is recommended to do each of the steps described below:
- Read the Whitepaper project and the ICO itself;
- Find out the problems that can solve organized crowdsale, and its feasibility for the business and ordinary clients;
- Get acquainted with the composition of the project team and their professional experience. It is recommended to contact the project founders and its leading experts, asking questions of increased complexity. It is worthwhile to promote profiles in Internet resources – often scammers use fake photos and data. You can also “drive” the data through services like Google images;
- Check the forums to get a clear view of users about this project. There you can find users who have already encountered scammers – they often give good advice;
- Verify the reliability of the escrow company that is used within the ICO. For example, using Escrow resources will allow investors to get their money back if the project fails to comply with the conditions of the crowdsale;
- Get acquainted with the opinion of rating companies about this. In the absence of any evaluation, it is highly likely that this project is fraudulent.