There have been some news reports of what could quite possibly be the most costly ICO scam yet.
There were two ICOs actually, but they were both run by the same company in Vietnam.
Basically, here’s what happened, this Vietnamese company, Modern Tech, was hosting two ICOs, iFan and Pincoin.
It really doesn’t matter what these “projects” were about because ultimately they were luring investors in with:
Guarantees of amazing monthly returns, something like 48%, but with a catch of a required minimum investment of $1000.
Rewarding an additional 8% bonus commission for referring investors.
That right there should have been all the red flags these investors needed to know to stay far away from this company.
For those who didn’t know any better, they quickly saw their dreams of easy returns on their investment disappear when that company Modern Tech, quit paying out in cash and instead reimbursed the investors with tokens instead, which dropped significantly in value soon after.
As if that wasn’t enough to scare these poor investors, they weren’t able to withdraw their cash investments either.
What’s even more sad, yet again, not surprising, is that once these investors decided enough was enough and protested outside of the Modern Tech building, the company had already been liquidated and moved out.
The numbers being thrown around as the amount of money lost by these scams are pretty big, something like more than $650 million.
Whether or not this number is accurate shouldn’t matter.
I say this because of how the Vietnamese government has decided to deal with this issue. Cryptocurrencies had already been banned in this country since late 2017, but with this new development, the Vietnamese prime minister has now ordered all financial institutions to refuse processing cryptocurrency related transactions. No doubt, this incident has only solidified the decision to ban cryptos in Vietnam.
It shouldn’t be that surprising to hear of more ICOs being revealed as scams. Any situation where money and uneducated investors are involved is pretty much an open invitation for con artists to show up.
The thing with scams is that they can’t work if no one is biting.
A market that is full of educated investors can work pretty well to self-regulate in this sense.
Here are some quick tips for those of you who are new to this space and wondering how to protect yourself from the smooth talkers who are happy to take your money.
Avoid these at all costs:
- Guaranteed ROI that seem too good to be true
- Rewards for recruitment
- A project that claims to be a game changer, yet doesn’t even have a minimum viable product, is nothing more than potential. It can be both potentially great, and equally potentially a failure. You need to be ok with this fact, don’t invest unless you can deal with the fact that you’ll lose your money.
And it’s always to check yourself:
- Don’t invest if FOMO causes you to skip doing research
- Don’t let your greed cost you in ways that you can’t afford
- Never let yourself believe an investment will be the end-all-be-all answer to your money problems.
- If you’re not sure, ask around different communities, search out people who have more to say then the cheerleaders of that project. Search for unbiased, logical viewpoints of the pros and cons of a project.