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ICO scams can be avoided by following these steps

ICO’s are proving much more profitable than IPO’s thanks to both cryptocurrencies and the blockchain technology. This has created several millionaires being long-term investors or simply traders who expect to sell their coins when the companies go live on exchanges. Nevertheless, ICO’s have been a target for scams and fraudsters. This has let to lack of trust in ICO’s and we will help guide you through how you can avoid ICO scams from a technical and legal standpoint.

How to avoid ICO scams

Firstly, read the white paper. what are they offering? Do they add value or solve a real problem or is it a copy paste of Bitcoin’s technology or that of Ethereum or some of the other top 10 coins? If that’s the case, its the first red flag because most real companies will come with a solution to a problem which they have time in reseraching and building the product. A scam company won’t spend time doing research.

Secondly, pay a great attention to the team and more importantly, the Development team. Check if you can find photos and LinkedIn profiles which look legit. The reason to pay attention to the development team is given the rise in the amount of coins which now stand at 1000+ and counting, if there was a crash to occur, only coins which provide real value will survive. A great development team adds some credibility to the ICO and even if it passes the scam test, it will stand a test in the long run which obviously will happen.

Thirdly, check the board members and the advisors are they reputable people with other successful businesses? or is it a celebrity with no business background and might not even know his image is being used for an ICO. If there are no pictures available on the site with the advisors, then it’s a red flag. That doesn’t mean all pictures with reputable personalities are legit. The former prime minister of New Zealand was recently used by a company in an ad with a quote which claims he endorsed Bitcoin but was a scam. Therefore, pictures of advisors are just a step away from a scam but not a guarantee.

Also, watch out for ICO’s with huge marketing campaigns and soo much give away tokens. A good project normally doesn’t need that much marketing to attract investors. Bitcoin and most other coins in the top 10 list in market capitalization do almost ZERO marketing but the solution they provide attracts investors to the project. ICO’s with random token gives always should be scary as well because even if they are to make it to the market, there are high chances that the market will get flooded with coins leading to little returns to you as an investor.

Furthermore, you would want to look at the terms and conditions given the fact that the ICO could be able to manipulate and get themselves free legally by inserting certain clauses that keep them safe after the scam. Also, you will like to know which court has jurisdiction in case of a legal problem. Pay attention that some countries as a whole are very unhelpful when it comes to tracking down scams and fraudsters.

 

 

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