Scam Coins: Everything You Need to Know to Identify Them

Since the inception of bitcoin in 2009, there has been a surge in cryptocurrencies, driving 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 Biggest 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 akin to Bitcoin, which earns 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. Nevertheless, despite the escalating alerts on the currency, Onecoin continued thriving by selling membership packages to attract more investors.

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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 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 earned the perpetrators over $4 billion from a 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 coins yet. Furthermore, 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 return. However, the channel’s asset mailing plan raised suspicion about 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 to commit fraud over unsuspecting and inexperienced persons. The platform, which was closed a few months ago, managed to garner over $8 million from investors. Moreover, 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 about 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 you don’t fall prey to Scam coins is to know the developing team; the platform should name a few team members immediately after introducing any new ICO project. Therefore, as an investor, you should thoroughly research 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 it away.  

Other projects can create fake team members with fake biographies to attract investors. Therefore, it would help if you spent a little time researching the individuals mentioned and checking 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, the project is 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 ICOs must embed a token or a currency system to 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 yearly; however, some 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. 

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However, there are ways to mitigate the risk, and the 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 crypto scams, beware of the persons, wallets, or exchanges in the crypto world.