Enter the word cryptocurrency in Google search, and you will probably stumble on at least a couple of articles related to exit scam. What is it and how does it work? Let's try to figure it out.
Simply put, exit scam (exit scam) is a fraudulent practice in which the ICO project collects money to finance development, and then disappears with investors' funds.
To this end, fraudsters, as a rule, develop cryptocurrency with global goals that cannot but attract users. Then, having received the funds of investors, they simply curtail their activities and at the same time grab all the cryptocurrencies received.
How to determine exit scam?
During the first eight months since the beginning of 2018, more than $ 100 million were stolen under this scheme. It seems that due to the prevalence of this type of fraud, it is easy to determine, but this is far from the case.
Before making an investment decision, read a few tips:
- Do some research: find out as much as you can about the development team, even if these are real people, you can do a search by photos. Examine their previous jobs, activity in social networks, not forgetting that the number of subscribers can be screwed;
- Check out the White Pages: this is a key document that defines the goals and means of the project. If you meet a lot of incomprehensible formulations, it already says that you should not invest in it.
- Does the promise look too good to be true? Trust your intuition and do not allow numerous promises to encourage you to make ill-conceived investments. At the time, BitConnect guaranteed investors a daily return of 1%, respectively, the initial investment of $ 1,000 over 3 years would turn into more than $ 50 million (unrealistic);
- Aggressive advertising campaign: if the project does not violate the laws, developers are unlikely to spend huge sums on marketing. Most often, scams place a lot of advertising in print and on websites, paying for their publication;
- You do not understand – do not invest: if you do not understand the essence of the project and do not trust the team, do not invest your money.
Fraud thrives everywhere, even in regulated industries such as finance.
Because of its novelty and lack of settlement, cryptocurrencies and various blockchain projects carry great risks, so be always vigilant!
Publication date 07/17/2019
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