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The majority of global financial markets are now strictly regulated, and for this reason, fraud is becoming increasingly rare. Enterprising fraudsters are turning to fintech innovation that is currently unregulated – cryptocurrency.

Essentially, a crypto crook aims to persuade “unconscious investors” to buy fake coins by transferring fiduciary money or cryptocurrence. In this column, we will only focus on the so-called “ICO exit” scam, not on thefts, hacks or Ponzi schemes.

We define a project as a scam only when it is proven that the money collected pre-ICO or ICO has been stolen and the team has disappeared. This means that the fraud has been planned and that the theft of investor funds has been deliberate.

PlexCoin ($ 15 million)

The OIC PlexCoin was halted in December 2017 by the US Securities and Exchange Commission. response to a formal complaint that founder Dominic Lacroix was defrauding US and Canadian investors. The complaint alleged that Lacroix announced an astronomical yield of 1,354% (which the SEC considered impossible to deliver), pushing a group of false experts to legitimize its project and trying to hide its past financial crimes,

The SEC froze all $ 15 million raised by the ICO since its launch in August 2017. Lacroix was jailed and PlexCoin’s parent company fined $ 100,000. Approximately $ 810,000 was still held by Stripe, the payment processor, while the remaining funds were held in various cryptocurrency portfolios belonging to Lacroix. It is unclear what charges will be brought against Lacroix and what will happen to the money deposited in his portfolios. However, PlexCoin was one of the largest ICO exit scams attempted in history, which was happily smothered in the egg

Benebit ($ 2, 7 – $ 4 million)

Benebit claimed to use a Blockchain token system to unify customer loyalty programs, such as frequent flyer miles. This ICO had all the attributes of legitimacy, including a moderate telegram chain with over 9,000 members, a marketing budget of over $ 500,000, and promotions for pre-selling tokens. With an innovative concept, a serious sounding white paper and a few dollars of well spent marketing, the Benebit team was able to generate a lot of hype, and investors began to buy.

However, things started going south when someone noticed that pictures of the team appeared to have been stolen from a British boys’ school. The details of the passport provided by the “founders” were all false. After this revelation, the team behind the scam started dismantling everything related to Benebit, including the website, the white paper and the social media accounts. Estimates vary, but it is estimated that the scammers have left with at least $ 2.7 million and up to $ 4 million

Opair and Ebitz ($ 2.9 million)

A Motivated Small Time Community Investors who invest money in Opair and Ebitz are trying to track down a mysterious developer known only as Wasserman, the brain behind two ICO scams that totaled 388 BTC

Opair promoted a decentralized debit card system using its own token, XPO. Users discovered that LinkedIn profiles of part of the team were fake and that Opair quickly disappeared, but not before generating just under 190 BTC in its ICO at the time. Summer 2016.

Amateur surveys conducted by duped investors revealed Ebitz’s mail servers were redirecting to the area of ​​Opair, which stood as a clone of ZCash with a few small changes. The team, a self-proclaimed “group of ethical pirates,” was hoping to raise 500 BTCs through its ICO, which began on November 28, 2016. In two days, BitcoinTalk users spotted the wacky connection of MX records from Ebitz to Opair.

The Ebitz website was removed shortly thereafter, but the OIC managed to collect about 200 BTCs before disappearing; although many users speculate that the BTC mainly comes from the developers to provide a “fake volume”, or the impression that many people had already invested in the project to build confidence and attract of Other investors to buy their tokens.

REcoin and DRC ($ 300,000)

At first glance, REcoin (Real Estate Coin) and DRC (Diamond Reserve Club) have tried to do something ambitious and d & # 39; bold – create a cryptocurrency that has been backed up with global assets – real estate and diamonds. Their founder Maksim Zaslavskiy claimed that the two start-ups had full staff, had legal relations and had already established relationships with retailers and investors –

The SEC alleges that neither RECOIN nor DRC They had “real operations” “, that both startups had distorted their total level of investment, and that none of the proposed projects had any chips or anything to do with Blockchain either SEC decided that RECO and DRC were not at all ICOs and were in fact securities, which led to the arrest of Zaslavskiy on September 29, 2017. According to the SEC, Zaslavskiy managed to collect about $ 300,000 before being captured PonziCoin ($ 250,000)

Yes, PonziCoin is a real cryptocurrency, and yes, very gullible people have been separated from their money after investing in it. The latest PonziCoin, which is “the first legitimate Ponzi scheme in the world”, is actually the second PonziCoin to exist. The first came out in 2014 and brought in about $ 7,000 in cryptocurrency, which by some estimates could have been worth more than $ 2 million today.

Another PonziCoin project appeared in 2017 using the same web address.

Originally conceived as a gag, it involved a public and open admission on its website that it was a scam. However, this has not prevented some investors from pouring money into the “product”. In total, a project, which openly admitted to being a scam, raised more than $ 250,000 and, surprisingly, the “founder” ran away with the (19459007)

Six Questions to Ask

ICO ‘s exit scams are developing in the current environment of incredible profits, overwhelming media hype, and the time – limited nature of ICOs, which make investors feel like they are in business. they need to invest quickly or risk losing a good deal No matter if you are a beginner or a seasoned investor, every decision needs to be carefully analyzed – there is no substitute for due diligence If you plan to invest in an ICO We strongly recommend that you take the following steps:

  1. Read the IOIC White Paper carefully Does the concept make sense to you?
  2. What is the problem of product resolution? Does this have a commercial meaning?
  3. Study the team and their experience. Get in touch with representatives and ask difficult questions. Dig into their history, LinkedIn profiles, and previous jobs. Tip: Scammers sometimes use fake pictures. Google’s reverse image search will work wonders.
  4. Check the forums for an overview of what the cryptocurrency community says about the project. Many people there have been scammed by ICOs, so they will have a more alert eye on the red flags.
  5. Make sure the ICO is considering using a trustworthy trust company to manage the funds for their ICO. Escrow offers you an extra layer of protection, guaranteeing you at least receive the promised OIC tokens before you separate from your hard-earned capital.
  6. Take a look at the opinions of companies on the ICO. If the new project is not evaluated, chances are it’s a scam. Also be sure to check and compare the risk scores.

We believe that cryptocurrency is the future and that this period of uncertainty is temporary, it is prudent to be cautious and careful before d & # 39; invest your hard earned. fiat or cryptocurrency in new enterprises

The opinions and interpretations contained in this article are those of the author and do not necessarily represent those of Cointelegraph.

Brian Kean is the Chief Business Development Office of the Investment Appraisal Agency, ICORating. He has extensive experience in financing investments and communications in retail businesses around the world.

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