This is about Scams or rather information about Scams. In the cryptoverse one of the biggest threat to investors is the SCAM.
What exactly is a SCAM? well the definition of a scam is “a fraudulent or deceptive act or operation.” For those investing in cryptocurrency this means that people or projects are trying to get you to invest money in something (a project) that they claim has value and that you will reap the rewards of that value by investing but in reality all they want to do is use your investment for their own personal gain without the prospect of you actually getting something out of it.
There are some specific aspects to a scam.
There is intent
The scammers never intent to let our share in the profits that they themselves gain. They have already planned how to attract their victims, keep their interest for as long as possible and how to exit with as much of your money as possible.
There is the lure
The scammers lure you with attractive proposals to their project, often these projects seem too good to be true. But hey, we are human and who can resist an opportunity to get rich?
The scammers will use false facts to present their case to unsuspecting victims. False promises, half truths and flat out lies will be used to spin an incredible tale of potential wealth and to get it all you have to do is invest.
There is concealment
Of course the investors don’t know the real story behind the scam. The scammers will do everything to hide the truth and protect their scam. The true facts are hidden from the injured party so that the victims have no way of knowing that they are buying into a well laid out plan to commit fraud.
There is loss
It always ends with a lot of people losing money. These are the people who unsuspecting invested in a project or product not knowing that the true intent of the people behind the scam.
All the elements mentioned in the previous section must be proven. Just writing an article or blog saying that something is a scam doesn’t make it so. People (and therefore companies) make mistakes, it happens. But the question is when that mistake becomes apparent if the company or people responsible knew about it, did they have all the facts and did they knowingly hide those facts from the public? More importantly was it their intent to mislead other people?
When a blogger accuses an ICO of being a SCAM it is important to present the facts and proof those facts. I often see headlines (also here on Steemit) that shout: ICO X is a SCAM! But when you read the article the author never proves anything, there are just assumptions and no proof. All that is presented are “red flags” like for example: no white paper, the team members of the ICO are anonymous, the white paper is a copy-pasted pile of garbage, their Pre-ICO is private etc.
Yes ,these are all things that you have to take into consideration before investing in a coin or token but they are not proof of an intended scam. To proof that something is a scam you need to prove that the people behind an ICO knowingly hid crucial information and that their intent from the beginning was to commit fraud.
Cryptocurrency is hot and there is a lot of money to be made. ICOs are raking in millions like it is nothing. So there is a lot of incentive to start a cryptocurrency backed crowdfunded projects for new services and products. But not everyone is a born entrepreneur, skilled IT technician of project leader. Chances are that ICOs can get of the rails by incompetence. A project can get under pressure to make deadlines. In this case there is no intent to defraud but rather mistakes that were made by the team behind the project.
For example take WCX, this was (actually still is) an exchange that promises low transaction fees, has its own crypto coin and a lot of other stuff that would make it an unique exchange worth investing money in. But…….there were a lot of red flags, a referral program that looked like a pyramid game. No working exchange, no coins, no real identity of the team members. Promises were made but never kept.
WCX has now announced that it will open its doors in March 2018.
WCX was announced before Exchanges like KuCoin and Binance who also have their own cryptocurrency.
Now the question is…..is WCX a SCAM? Too be honest I don’t know. There are red flags that much is sure. But until now there is no real proof that WCX never intended to follow up on their claims and present us with a working, low fee, crypto exchange.
Also they are still active on Twitter despite already getting a lot of money from backers. So are they trying to get even more money out of their “marks” or are they really trying and just doing a poor job?
If someone has real proof that WCX is a SCAM please let me know
When reporting irregularities of misrepresentation of facts it is important to remain objective and investigate if this was intentional or just poor work by the people responsible. It is however important to keep reporting the red flags because this information is important to future investors.
I know that the headline SCAM! is a real attention grabber but let’s get our facts straight. It’s hard enough keeping track of legit ICOs and projects and we need reliable sources of information to help us decide which are good investment opportunities and which are not!
