Famous Cryptocurrency SCAMs

The US Securities and Exchange Commission, the UK Financial Conduct Authority, the European Securities and Markets Authority have many times warned investors not to join initial coin offerings or at least to be very careful.

According to Bitcoin.com, around 46% of all ICOs held last year already failed as of February 2018. Indeed, thousands of unsuccessful campaigns weren’t scam. They just haven’t worked out, as it sometimes happens with traditional businesses. However, everyone who decided to invest in digital coins or tokens should consider the risk of scam. According to Chainalysis report published by Bloomberg, investors spent $1,6 billion for ICOs in 2017. Around $150 million were stolen and many thousands investors suffered.  

The Coin Shark will briefly tell about famous scams that left their backers without a penny.

Spicy scam – EROS.vision

The fact that a decentralized anonymous market of “adult” industry was illegal, could have been taken for granted. The service offered private payments for sex-related services. However, according to Chainnews, the project did manage to attract as much as 7400 Bitcoins (around $20 million in June, 2017).  

Government scam? – El Petro

Last year the government of Venezuela announced it would issue a cryptocurrency Petro backed by country’s oil. It was claimed that a digital currency could help the country to fight economic disaster. Many crypto-related media called the project scam. Bitcoin Chaser writes that the government simply tries to  “redecorate” the inflating national currency, bolivar, and attract investors. New digital asset will be actually the same as bolivar, suffer from corruption and be under state control. In February President Nicolas Maduro claimed the project got $735 million investment, however it’s difficult to prove it. Anyway, the ICO has just finished and it is probably too early to draw conclusions.

Nuts to You! – Fruit & Vegetables  Scam Prodeum

Early in 2018 a lithuanian (as mentioned in the whitepaper) startup called Prodeum promised to revolutionize fruit and vegetables industry. However, what it really did was shutting down the website with only a word “penis” left. The idea of the project was to provide users with the opportunity to track a particular banana or an onion from a garden to a store.

Luxury Scam – REcoin & DRC

Project founder Maxim Zaslavsky claimed he would create a digital currency backed by real estate and diamonds. Cointelegraph writes the startup ensured investors that it had a professional team, legal assistance and established relations with retailers and investors, which was not true. The US Securities and Exchange Commission claimed the company could not fulfill its promises to let investors exchange their coins for real diamonds, as it basically was doing no business. Anyway, accounts were frozen and the founder was arrested. SEC said he mentioned to gain approximately $300,000.

Today many coins and tokens really look like a “digital graveyard of broken promises”, as bitcoin.com says. Perhaps reasonable regulations will manage to dry out the digital ocean of scam, making the market more reliable and, as follows, even more appealing to investors.

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