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Over $1 Billion Lost to Shit Projects or How to Spot Red-Flags

May 19

How to research ICOs and spot red flags in cryptocurrency projects

We all probably know the number of crapcoins, shitocoins and other matter-coins floating around in the crypto air. The Wall Street Journal says that the number of scammy and shady projects could be greater than in the early days (well, it’s not a surprise) by claiming that it estimates to around 200 projects.

Apparently, the Wall Street Journal analyzed over 1,450 tokens and found 271 ones which raised some red-flags.


What are those red-flags? (Keep in mind that this has nothing to do with the white “I surrender” flag)

According to WSJ, the red-flags can be described as plagiarism of documents, fake teams, fake and unrealistic claims about the project, and, of course, our favorite – signs of a Ponzi scheme.

We have to say that the majority of whitepapers have been copied from other projects and it appears that they didn’t even care! “Let’s take this whitepaper, slap our name on it, delete some stuff and we’re done! Golden!”

Well, it even went to extreme cases of “I don’t give a fuck” when whitepapers contained the same exact team member names from the original one. Did we mention that they didn’t even change the roadmap, logos, and branding? 271 sloths!


Why would you need to reinvent the wheel?

Marketing plans, security features, and developers notes have been copy/pasted and claimed to be “authentic”. An easy way to start a business when you have no idea how to do it.

High-profile developers, copywriters, marketing professionals were hired to take care of the projects. Sounds like a fairy-tale? It actually is. There are freelancers out there who sell their services for as low as $100. And what can you expect? - The same script on 271 whitepapers but with slight changes to project names.

Bradley Bennet from FINRA says:

Copied language, the absence of named employees and promised high returns are warning signs for investors.

What could go wrong when those 271 shady projects are out in the wild?

Well, they have raised over $1 billion! Investors who have no clue about the projects or are too lazy to research the project (this is where I will promote my Tokenlion ICO research tool, wink wink) invest crazy amounts of money expecting fast returns. Some of them are still raising funds to this day.

According to the CCN, only $273 million has been claimed in lawsuits. That’s a really small amount! Looks like investors don’t care about their money and the cryptocurrency market in general. What do they care about then? Fast, easy, big, juicy returns!

Satis Group reports that in 2017 ICOs have raised over $9 billion – a rather impressive number for a rather fresh phenomenon.

Here comes the SEC. These guys jumped in front of the investors with their hands held up high but in a form of an ICO – a fake ICO.

“Guys, look! These are the main giveaways of a fraud! LOOK!” said fake ICO SEC. Actually, this might be a good way to show the investors what to look out for before investing in an ICO. Is it a waste of time? It depends on how a person perceives education.

SEC, in general, isn’t very happy with the current situation of ICOs. They have warned investors and cryptocurrency projects to be careful and avoid breaking regulations.


What about projects that only claim to promise huuuuge amounts of profits over a set period of time?

SEC spanked them with a belt of criticism. For example, a Plexcorps ICO raised over $15 million. How? They promised an ROI of 1,300%. Isn’t that a red-flag? Apparently, it’s not for an ignorant investor.

All in all, investors should do their own due-diligence on projects they want to invest. People should look out for old-to-the-bone stock images, buggy websites, or just shitty website design in general (we are talking about 2000s style design). Also, look for reviews, statistics and other sources of information.

Yup, Tokenlion tracks ICO social media statistics and it’s updated every 24 hours! Because social media can say a lot about the project.

Certainly, there are some great projects out there and not all of them are scams. Look for projects that solve real-world problems, which have made partnerships with other companies or projects (with caution).

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