How to recognize an ICO scam

[Tomcat]

Scam is a scam: again, a simple request "scam + history" will present a large list of all sorts of services that in one way or another decided to play on the trust, stupidity or carelessness of users. The spheres will be very different: from energy to the banking sector. As for the ICO sphere, despite its youth, it has existed since 2013, there are enough scams in it.

Let's try to classify scams first:
First, the classification by time : short-term (there are most of them and more about them below), long-term - these are, first of all, HYIPs. The clearest example is OneCoin, about which everyone has already heard, but new minions still appear.

Secondly, in terms of complexity:

• The most simple ones. They can be compared with SPAM: they are beaten not purposefully, but with a massive effect, in the hope that the statistics will work out and every hundredth / thousandth will agree to contribute something;
• Of medium complexity - there are no longer drawn faces, but bots with history, not just a description in the style of "it will do it anyway", but a completely adequate display of the beliefs of blockchain adherents on paper. But a thorough analysis of the team and the product lets you know that everything is not at all as good as we would like;
• Difficult - in these cases, it is extremely difficult to recognize a scam: many today refer one well-known crypto-bank to this category. However, so far I can neither confirm nor deny this information.

Thirdly, on the subjective side, as lawyers say:

• When creators initially want nothing more than fundraising;
• There are cases when the creators, for one reason or another, come to the scam as a result of the ICO or the work of the project (perhaps one of the brightest examples is MtGox, and today EOS can become such).

In the first case, scammers deliberately do everything to get more and disappear quickly. In the second, the possible losses of the "depositors" are associated with the lack of will of the creator (the "tired of everything!" While eating - obtaining crypto assets.

To evaluate any ICO project, you need to focus on four components (I already wrote about this, but today we will look more broadly):

1. Team - a team;
2. Tech - technology;
3. Theme - concept;
4. Token is the legal status of traded crypto assets.

There is no single recipe in the assessment, so let's dwell on the fundamental things, considering and detailing which, you can create your own model of criteria:
The team always needs to check for the truth of the relationships, that is, to look not just for a profile on facebook, linkedin, but to go out to people who are somehow really lit up somewhere. The fact is that in the online environment there must surely be people who often sit on social networks, have stable communication groups and quite openly discuss their lives. If there are none, this is very strange. Of course, there are groups where people gather precisely because they are introverts, but if from the whole host of acquaintances of each of the team there is not one with a detailed story, this should arouse suspicion. The theory of 6 handshakes works in this sense: it is not necessary to dwell on the number itself: the main thing is that the participants are connected with the real world:

• First of all, you need to check the connections with the advisors - their reputation costs money and therefore you do not need to be lazy to write and call in order to confirm / deny information about the project where they participate.
• Further, a legal entity : registration, location (online cards as a gift to you); if we are talking about preICO, then you can even check the postal address by sending a welcome letter on paper (at least twice I did this and my instinct did not let me down). Associations and other associations where this legal entity should be located. Recently, for example, I checked COSS with a team and out of 7 requests received 7 responses confirming that this association is indeed a member of a number of business communities (see example below).
• There is one more thing that often has to be used in everyday practice: search by phone number or email. Of course, it is not always easy to find the personal address of someone from the team, and the phone can be created for a special project. But the probability of finding this data is not so small. For example, before ⅓ projects, one way or another, such data were eventually disclosed. Why is this needed? The fact is that everything has the property of being indexed. Therefore, old accounts on social networks, on message boards and in many other hidden corners of the Cyberverse can often say more about a person than thousands of letters written in glory.

Technology is very difficult to evaluate if you are not an expert. True, once I was helped by a banal search for the source code, which coincided with the script of another project by almost 100%. It is good that the Internet was created precisely as a collective mind : everyone can ask a question on a specialized forum, a question site or a chat (in telegrams, for example, there are enough of them now). Make a link between the first and second "T": some trivial request to slack / telegram to the developers and the project support team that you want to invest in: just the other day in the chat https://t.me/bitfunda "deafness coefficient" appeared (by the name of the founder, who did not answer a single question, but there will be more material about this, I will just say that he even had Apple in his clients, who asked to develop a marketing strategy). Feedback from scammers and non-scammers is completely different. Fraudsters do not answer at all or answer very vaguely to direct questions. There are exceptions, of course, but this is a different level of training. By the way, here is a small list of channels where you can ask a question:

1. https://t.me/bitfund - a good chat with ICO specialists and investors and the assessment of blockchain projects in general
2. https://t.me/ICO_law - the chat is not as big as the previous one, but there are a lot of useful links and materials for beginners here.

You can increase the selection by several orders of magnitude, but I personally do not advise: firstly, the endless flow of information only distracts; secondly, there are a lot of repost or news channels, and we are talking about those where real people analyze live examples; thirdly, everyone is now taught to use the search bar. It's bad that not everyone is taught to do it right. And yes: if you still know sensible sources - write, we will add together.

Concept. If in technology we evaluate the code, the possibility of selling a product from the point of view of production, then here is a competitive market and the economic usefulness of the service as a whole. Unfortunately, even normal projects do not analyze the first and second components (which ultimately results in the collapse of many services). But scams can be distinguished by too rosy descriptions or, on the contrary, confusing definitions, of which little remains clear after reading. Let's in detail:

• We take the White Book and the Roadmap. The first one says: "The launch of the first stage will take place no earlier than March 3, 2018", We open the Roadmap and see: "Completion of the first stage: April 2018". Stage implementation period is 3 months. In this sense, I do not really like the approach of ZrCoin: "the dates for the completion of construction and the launch of the first production line are scheduled for the spring of 2018". We'll see, but for now they look overpriced.
• Now let's take a look at the development of the concept: how much time has passed from the moment of its birth to the first implementation, or at least description? And how many days, weeks, months between this very implementation and the ICO? Here you can find a good example for training such skills https://icotracker.net/project/skyway .
• And the most important question: how will the blockchain project win, conditionally speaking, in the race against the classic it? For example, how can a team that has been doing the same thing, but not for the first year, can beat SONM & Golem? This is a question of doubt. But for a scam, the question is simpler and tougher: is there such an implementation in the classic business? No? Then why?

In this regard, I liked the approach of the Kickico team, which is trying to unify the study of projects BEFORE launching them, and not after.

Token. Finally, after the SEC & MAS, people began to understand that it is not clear what to release, it is not clear for whom - not only strange, but also dangerous. As a result, if we see that tokens are created according to the "buy cheaper - sell more expensive" system and there is nothing else behind them: bonuses, participation shares, buybacks, and so on, then this is another reason to think about a feasibility study (feasibility study) and its adequacy. Here are a few more nuances on the topic:

1. Is there a token distribution agreement?
2. How is the token generally indicated in different documents: Roadmap, White Paper, public offer, etc.?
3. In this video, you will find not an example of a scam, but rather an item that, among others, looks suspicious: when the White Paper says about the buyback, but the documents are purely legal - no. Trick or omission? Depends on other areas, but at least a reason to study the project in more detail
4. How many tokens are issued and what is their economy? Let's say, to maintain growth and liquidity of ETH, a daily turnover of $ 5,000,000 or more is required. If it is not there, then there is a fall. In this sense, EHT is an inflationary token, while btc is a deflationary one. Stablecoins are still only at the stage of formation. Why know this? Then, that the Concept should take into account the economic essence of the token and proceed in terms of growth. Today, not all projects, even from the white list, do this - this is another reason to think about the possibility of participating in them.

Everything described above is usually perceived as a kind of complicated element and is left as “recognized but not perceived”. But these are minimal examples of fundamental analysis on which investment and risk assessment should be based.

In Russia and the CIS countries, the priority is mainly given to technical analysis. Let us, and we, too, will not bypass it.

Let's say the same. Here you can find interesting information about one of the most suspicious among the latter. In addition to ICOtracker, there are a number of similar projects: ICOrating, where there is a special tab with the bookmark of the same name, icostats and a number of others. On Golos Den Ivanov made a selection in this regard - to him and I address.

This approach was created by Alex Kontegna. The author explains this ICO evaluation structure as follows: “our map divides the space into a matrix with nine slots: in positive (green) and negative (red) fields, defined at different intersections. A good use of this matrix is to measure the risk parameter of your portfolio (ICO tokens) if you own multiple coins."

The following simple rules are attached to the matrix:

1. Compare the two assets you want to invest in according to the "red zone": the greater the amount of money already collected by the project in the negative (red) zone, the higher the risk associated with the possession of such tokens. The principle is that services with negative coverage and no solid foundations first become even less stable as they grow.
2. Follow the opposite rule when comparing two assets that are in positive territory: the larger the amount raised by a project in positive territory, the lower the risk associated with owning its tokens.
3. Finally, investing in ICOs with negative characteristics should be avoided altogether. Of course, sometimes there are factors that outweigh even that. For example, earlier projects that can make ICO attractive in terms of speculation.

But you need to understand that automation is good for mass assessments and does not work well for individual ones. Therefore, it is better to use a point approach here: first, applying the principles outlined above; secondly, paying attention to details.

Let's say registering a domain. If the project was developed, then it should have, albeit a small, but history. And therefore, a domain that is 1-3 months old, even six months old, looks strange (unless there is one affiliated with it). Always impressed by the openness of data, even where it is not necessary to do so - here is the same example from the latest observations https://who.is/whois/coss.io. At the same time: if the company declares a certain story about old projects that are even already closed, then this information can be checked:

1. http://web-arhive.ru/ - we look at what happened before the ICO came with projects
2. directories (formerly there was DMOZ, now it is Yandex and local site directories)
3. backlinks: when a site is deleted, not everyone removes links to it, and there can be many of them: partners, news sites, forums
4. there are even finer details: dates in the sitemap of old sites or elements of seo-optimization on the pages (scammers usually do not bother with this, since they make projects on their knees and extremely quickly).

If we are not talking about the prospect or retro perspective, then you can look at the excellent alerts (goals) tool from Google and use it by writing the main keywords related to the brand that you are researching.

To consolidate the reading a little, consider a number of examples.
https://matchpool.co is a blockchain-based social network. The following happened to her (according to Forbes): “In early April 2017, its creators received $ 5.8 million through ICO. But after a couple of days the technical director left the company, who was suspected of illegal withdrawal of funds. Similar stories have happened in other startups.

Accordingly, it is virtually impossible to find out about this until the moment when in the head of one of the participants (which is important), the very idea of leaving the project has not been formed. This is a risk, but it should always be included. Accordingly, in this aspect, projects benefit from which:

1. There is a multisignature;
2. A certain stabilization fund is being formed, which will be used in some unpleasant situations (the case with the same Satoshi Fond);
3. There are smart contracts for the return of amounts in certain situations (not passing the lower ICO threshold, force majeure, etc.). You can read about examples in the book.

In conclusion, I would like to highlight the following aspects:

Before rushing into battle, pay attention to the already existing scams - study, analyze, draw general conclusions:

1. https://nodio.net/ - 2016, Ukraine; the site is down.
2. https://www.ebitz.org/ - 2016, Anonymous; the site works nominally.
3. http://www.tithecoin.com/ - 2016, USA; the site works.
4. https://ascendancy.io/#/ - 2016, Unknown; the site is down.

In many areas (business organization, development of anti-fraud solutions, ICO marketing, etc.) I have heard about some secret techniques and techniques more than once. But there are very, very few of them, and the very approach that there is some kind of insight leads us to a real concealment of information, which in turn allows us to manipulate the market on the one hand, and on the other, leads to a situation where we hope for something that does not exist ... This is exactly the case with the ICO assessment.

You need to understand that ICO is a beginner, which means a high-risk business. Moreover, within the framework of the latest statements by the SEC & MAS.

To find a scam, you need not some super-methods, machine learning and working with big data (although this, of course, would be useful to everyone), but diligence, attention to detail and time spent in proportion to the investment in researching ICO projects. No time to waste energy on this? Either do not go into projects at all, or refer at least to the same https://www.kickico.com/ - the guys, at least, are trying.

Finally, ICO is a decentralized approach to raising funds, so you should not copy the methods of centralized analysis here in full, because many issues in the blockchain environment are, by definition, resolved on trust.

In order to properly invest in an ICO or a startup on the blockchain in general, you need, in my opinion, to accept three simple rules:

1. The service for you personally must be understandable in the principles of work and close in purpose;
2. The speculative component should not be the only one (in this regard, Mavro is just an example of the opposite);
3. And, finally, you can safely invest only those incomes that go above your personal expenses, no matter what specific amount we are talking about.

In general, this is not all, but basic - yes. Next, you need to vary the principles obtained within the framework of specific assessments and develop your own assessment system, which can be:

• By the criterion of perception: positive or negative;
• By the level of perception: difficult or simple;
• On a point scale:
• Ten-point is one of the simplest and most understandable: everything below zero is closer to a scam; everything higher is farther from the scam;
• 100-point. If your personal assessment set has a hundred or more elements: the approach is good for semi-automatic assessment;
• You can also use a mixed system: let's say negative factors are assigned up to 10 points in minus, and positive, respectively, in plus. Initially, we take each project for 100% and then we begin analysis: if the final grade is below 33-66%, then this is a suspicion of a scam, 66-75% is the norm, then there are already good and excellent projects.
• By other criteria, for example, using a system for evaluating securities or applying an approach of emotional coloring (negative, neutral-negative, neutral, neutral-positive, positive).

Thus, a system for identifying scams can be built, but the only thing that always remains outside the brackets is our common human greed: if it is characteristic of you at critical moments, then my personal position is simple: “ICO is not for you”.