The ICO Scam That’s Been Going On
In case you don’t know what an ICO is, well it’s an initial coin offering, in other words, a way to raise funds similar to an IPO (initial public offering) that established companies use. ICO’s are as the word says a thing of the crypto industry. They come up with a fancy idea, set up some neat looking website, and then try to raise funds with the help of listing sites, and what not.
What’s so scammy about that you might think? Well, it really doesn’t have to be like that, if they actually planned to follow the roadmap they’ve laid out but that isn’t very often the case.
It’s more so a way to sell their coins that have literally been created out of thin air. Another way to make money so to say and if the company fails, well so be it. Everyone knows its highly speculative and with that comes risk.
More and more people have been burned in 2017, and early 2018, 985% of the companies failed and it turned into nothing more than a pump & dump scheme and people caught on to that. Stopped investing, so those ICO initiators had to come up with something new to keep pouring money in and the ICO scam was born and goes like this:
Set up a fake social media campaign
It’s no secret that any type of social engagement can be bought. If you do a quick search for Instagram followers the sites that pop up are a dozen a dime, and there’s no doubt that most of these accounts/followers are fake. Some articles dispute this, and it’s their right to do so of course. And I have to agree, it doesn’t have to be fake if you do it the right away, using the right methods, and actually spent some time on it.
But we’re digressing this article isn’t all about Instagram
What most ICO’s do is start off with Telegram instead of Instagram. Apparently, Telegram is the new famous platform in the crypto spheres because it’s somewhat decentralized and unregulated. At some point, it got forbidden in certain countries but they found their way to keep operating there. Much to the joy of crypto enthusiasts.
Bring on the news
News sites started to pop up within my opinion very unnatural backlink profiles. You can see that as the metrics make little sense. Think of a TF/CF ratio where the citation flow is three times higher than the trust. A massive spam factor if you know a little about SEO.
Pump it and then dump it
The whole idea behind this is to set up a massive social campaign, largely fake because that’s the cheapest way to accomplish it. Then get the coin listed on a top 5 exchange and a few coins were sold (remember people aren’t crazy anymore), the founders hold 99.9% of the coins so they can literally sell it for any price they want. Pump the volume up big time so it gets in the picture. Start up the fake news parade and soon everyone knows about it, buys on top of the pump, thinking it’s a solid investment, only to be dumped later on because as said most coins belong to the founder and if they want to get rich quick they won’t hesitate for a second to dump all those coins on the market, wait for others are desperate to sell at heavy losses and rinse & repeat the same over and over!
Welcome to the world of crypto!