Scam Coins: Everything You Need to Know to Identify Them

Beginner’s Guide / 21.10.2020

Since the inception of bitcoin in 2009, there has been a surge in cryptocurrencies, driving to a lucrative crypto market. Although the market has excellent returns, escalating insecurity, privacy infraction, and scams drive investors away from investing in the crypto world. There are many insecurity risks like phishing, hacking, impersonation, and malware attacks intending to take advantage of unsuspecting persons. 

However, the most common crypto risk is scam coins, which lead to the loss of billions of dollars annually, thus driving people away from crypto investments. Read on to understand what a scam coin is and how to protect yourself.

The 4 Most Common Scam Coins

  • One Coin

One coin, a Bulgarian-based coin founded in 2014, is presumably the most famous cryptocurrency plot ever, ripping billions from unsuspecting people. The coin came with grand promises of a coin akin to Bitcoin, which earn supernormal profits for investors. 

However, some people noticed early signs of illegitimacy; the UK’s Financial Conduct Authority (FCA) even warned investors against One coin. Even with the escalating alerts on the currency, Onecoin continued thriving by selling membership packages to attract more investors.

There was neither a blockchain nor a coin dubbed Onecoin; it was all fake. 

The coin began crumbling because of unfulfilled promises, including the promise of a blockchain and a new exchange platform. Investors began pulling out their funds, but it was all too late since many had already lost millions. The company’s owner Ignatova disappeared in 2017, and his brother Ignatov continued operating the fraudulent company. However, later Ignatov was arrested and is facing a prison sentence. This scheme was able to earn the perpetrators over $4 billion from the few years of operation.

  • S-coin

S-coin is another notorious crypto-coin scam, and just like one-coin, it runs on fake future promises. The currency was supposed to launch in 2017; however, the platform hasn’t issued any coin yet. S-coin promised to attach the price of 1 Euro to its cryptocurrency; still, they lacked a proper demand-supply mechanism planned.

Platform users send Bitcoins, and then they get S-coins in returns. However, the channel’s asset mailing plan raised suspicion on whether S-coins are real digital assets. Transferring digital assets safely happens in a transparent, safe, and permanent platform dubbed blockchain. Mailing, therefore, doesn’t suit a digital currency. 

  • Plex Coin

Plex coin is another ICO project used in committing fraud over unsuspecting and inexperienced persons. The platform, which was closed a few months ago, managed to garner over $8 million from investors. It promised investors returns of up to 1,354% in less than a month, thus inducing more people to invest in fake assets. Fortunately, authorities arrested and charged most senior-most perpetrators and PlexCorps owners, including Sabrina Paradis-Royer, Dominic Lacroix, and Yan Ouellet. 

  • Earth Coin

Earth Coin, believed to be obtained from the Litecoin fork in 2013, developed as a medium of exchange. This project depends on the earth’s attributes, seasons, calendar months, lunar cycles, etc. 

However, this coin’s basics prove that it’s not a real coin since little information is known of the platform since the website neither shows the goals nor the actual vision and mission.  

Protecting Yourself From Scam Coins

Researching The Project Team

The first way to ensure that you don’t fall prey to Scam coins is knowing the developing team; the platform should name a few team members immediately after introducing any new ICO project. Therefore, as an investor, you should do thorough research on the project’s team before investing in a crypto project. A project that doesn’t display its team is probably a scam, and you should shun away.  

Other projects can create fake team members with fake biographies to attract investors. It would help if you took a little time researching the individuals mentioned, check them on linked-in. Their absence thereof should send a red alert of an upcoming crypto scam

White Paper Analysis

The whitepaper outlines the ICO’s entire business strategy, including its various steps to ensure project completion and market release. If you encounter a company that doesn’t show a white paper, then the project is wholly unreliable and probably non-existent.

Moreover, it would help if you considered how the project implements the roadmap displayed in the whitepaper. Non-adherence to the road map is a sign of a fake ICO project. 

Token Sale Analysis

All ICO’s must embed a token or a currency system that will help them publicly raise funds in crowdfunding. Watch the token sale performance over time, and see the progress of the token in the markets. All real companies should allow users to chart the ICO process; if you notice a project that hides token sale progress, avoid it.

Final Word

The crypto world releases hundreds of projects every year; however, some of these projects are just promises that never solidify. A look at some of the past most common scam coins shows that millions are still unaware of the scams. That has led to many losing their wealth in fake money deals. 

However, there are ways to mitigate the risk, and topmost is being cautious about your online crypto deals. Examine the team’s existence, white paper presence and adherence, and analysis of the token sales. Taking precautions will help protect your wealth from scam coins and other crypto scams. Moreover, to protect your wealth against other forms of crypto scams, beware of the persons, wallets, or exchanges in the crypto world.

Adam is an outgoing young lad who likes adventures and discovering new things. Despite his boring life, he loves writing about cryptocurrencies and exploring what blockchain technology can do for the coming digital world where all adventures will be virtual.