We have already spoken many times about what to look for when investing, how to choose your altcoin, and how to spot a fake team. But crypto hunters—fraudulent projects—and utterly useless coins are just waiting for investors at every step. How can you tell from a distance that something is wrong or at least dispose of a shitcoin that accidentally got into your portfolio before it starts stinking too much?
In May, the U.S. Securities and Exchange Commission (SEC) tried to remind people of the risks of ICO investments by launching its own “fraudulent ICO,” HoweyCoins. The token was named after the Howey test used in U.S. law for identifying securities.
The organizers of HoweyCoins talk about the advantages of uniting blockchain and tourism, and, at first glance, the project site looks transparent and informative, as there you can find an eight-page white paper, all the “necessary” team members, including a CEO, developers, a legal officer, a manager of a department for attracting partners, and heads of PR and marketing departments. On the top of the main page, a countdown for the presale with a 15 percent bonus is launched (it is constant at 14 days 22 hours, only the minutes and seconds change). There are even reviews from celebrities that are so “loved” by the commission.
After clicking on the “buy coins” button, the user enters a page with the regulator warning that it is a hoax: “If you responded to an investment offer like this, you could have been scammed. HoweyCoins are completely fake!” writes the SEC, pointing to the following signs of a fraudulent offer that are inherent to HoweyCoins:
The promise of a high guaranteed income;
Involvement of stars;
Application for SEC approval;
The possibility of buying tokens using a credit card;
The presence of a presale, which is likely to lead to a pump and dump scheme.
“Fraudsters can quickly build an attractive website and load it up with convoluted jargon to lure investors into phony deals. But fraudulent sites also often have red flags that can be dead giveaways if you know what to look for,” said Owen Donley, chief counsel to the SEC Education and Investor Protection Division. By the way, Donley appears on the fraudulent website as CEO and chief architect of HoweyCoins under the name of Josh Hinz, which is also a ploy often used by scammers.
From All Sides
Even if you learn to masterfully single out fraudulent projects, these are not the only dangers that lie in wait for an investor in the vastness of crypto space. As noted by ICO advisor Andrey Sergeenkov, “the investor’s risks are not only that the project may be fraudulent, but also that it can never be implemented or become popular, and the acquired tokens will be useless garbage.”
The organizer of the Useless Ethereum Token ICO openly stated: “You give money to a random person on the Internet, and he will take that money and buy something with it. Honestly, maybe it will be something from the realm of electronics. Maybe even a TV with a large screen. Seriously, do not buy these tokens.” This did not prevent useless tokens from collecting 310 Ethers in July of last year (about $61,000 at that time). “Enough to buy 51 TVs,” as written under this amount. “I felt that someone would lose money,” the project creator wrote ironically.
Not everyone is so honest with their investors. In June, Michael Rosenblat and Aaron Pardes, the CEO and CTO of the Tradenostix platform for crypto traders launched a humorous site called “Do I Own a Shitcoin?” You can drive a coin ticker into the search box, and the author’s opinion on your investments will be displayed below.
BTC (Bitcoin): ” Is this a serious question? Bitcoin is king. Bitcoin is gold. Bitcoin is God.”
ETH (Ether): “Praise to Lord Vitalik and his creation. Might be a shitcoin one day, but hodl it for now.”
It is worth noting that the site does not update the estimates depending on the events in the market and at the time of its launch, Ether was trading at around $500. Unfortunately, it reached the highest mark since June at $538, and by now, it has fallen below $200. So, perhaps, if the creators had actively maintained their site, they would have adjusted their forecasts or would have noted that the aforementioned “one day” has already come.
BCH (Bitcoin cash): “Definitely not the real Bitcoin, but a competitor (mid- to upper-tier shitcoin)”
EOS: “Mid-tier shitcoin, mainnet launch was delayed due to vulnerabilities. Let’s see how they do.” Since June, EOS has also changed a lot.
XRP (Ripple): “Do you like centralized cryptos?”
LTC (Litecoin): “This is a fast shitcoin . . . may as well HODL.”
USDT (Tether): “I mean . . . this is kind of shit. Trade with real USD if you desire . . . ”
ADA (Cardano): #HODLGANG . . . solid-tier shitcoin right here! Until people make scam ICOs on top of it then dump to crash price.”
OMG (OmiseGo): “Shitcoin, but HODL it . . . why not? You are holding shitcoins anyways.”
DOGE (Dogecoin): “Such shit, but HODL for that yearly pump.”
The site does not have individual descriptions for every coin. The same descriptions are displayed for some tickers, which change when the page is updated, for example:
ZEC (Zcash), DASH: “It’s not Bitcoin, but we’re hopeful for the future,” “Good choice.” But Zcash, can also display the following description: “That’s some solid shit right there.”
XEM (NEM), ETC (Ethereum Classic): “Not bad,” ” Good job! You selected a top-tier shitcoin, not a shit-tier shitcoin,” “Good choice,” “Hodl that shitcoin,” and “Definitely a shitcoin.”
BCC (BitConnect): “Sell this shitcoin and start over,” “Yeah . . . this is pure shit,” “You choose poorly,” “If this was an actual shit, it would be violent diarrhea,” “You made a shit decision,” and “Supershit.”
DGB (DigiByte), BCD (Bitcoin Diamond): “Hodl!” “Stretch this shit,” “Not bad,” “Good choice,” “It’s not Bitcoin, but we’re hopeful for the future,” “Definitely shit,” and “Good job! You selected a top-tier shitcoin, not a shit-tier shitcoin.”
In a discussion at Reddit, Rosenblat noted that the project attracted a lot of attention and they also decided to make an email list to “really inform people about coins.” On the site, you can specify your email and subscribe to receive news.
Live like a Scam or Die like an Honest Coin?
Another “explorer” of questionable projects is the site called Dead Coins. On it, coins are divided into four sections “deceased,” “hack,” “scam,” and “parody.”
The latter include TheresaMayCoin, MtGoxcoin, SilvioBerlusCoin, Mariocoin, Boringcoin, Obamacoin, Thesmurfscoin, Lebowskis, JesusCoin, Trollcoin, Vodkacoin, WeAreSatoshi, Scamcoin, Asscoin, Sexcoin, CryptoMeth, and HoweyCoins.
More than 680 “deceased” coins belong to projects that deleted their sites, stopped communicating with the community, and whose developers disappeared or whose token depreciated down to nothing. At the same time, they were not necessarily scams, as some simply could not realize the proposed idea due to technical or material possibilities.
The “hack” section contains the least number of coins at only 12. This includes those projects that were hacked, but in most cases, these are projects with malicious software. That is, users downloaded an official client who stole money from their wallets (projects like Oreocoin, Thecoin, TraderCoin, YinYuanCoin, JunnonCoin, MouseCoin, Chichicoin, and CopyCoin).
Finally, about 200 projects are collected in the scam section. And, unlike the “deceased” that have already harmed users and are at rest, many fraudulent projects collected on the site are still functioning (Vyigrat, Zerocoin, ZECD, Commodity Ad Network, FuturoCoin, Farad, PM7, USI Tech, VeroCoin, Aladincoin, and PIP). This section represents the greatest practical benefit, and as one of the verification stages, the investor can enter the name of a project on the site and find out if the coin they liked is on the scam list.
If many traditional companies are trying to get their minute of glory by carrying out “blockchain rebranding” (Riot Blockchain, Long Blockchain), then fraudulent crypto projects try to cash in at the expense of the name of the major players in the cryptocurrency industry. The Kraken project included on the Dead Coins scam list has nothing to do with the popular exchange, as the site reports that the developer of the project stole the coins through a swap process, whose participants, as expected, received new coins, but they had no value. The developer did not carry out the swap and vanished with the coins. At the same time, the site of the project is still up and running.
Shitcoins can’t buy happiness. Or, in the long run, anything else.
There’s a shitcoin born every minute.
If you have to ask if your coin is a shitcoin, it’s a shitcoin.
A shitcoin saved is worthless.
A fool and his shitcoins are soon married.
If you can’t identify the shitcoin-holder in your first 30 minutes at the table, check your portfolio.
Better to remain unlaunched and be thought a shitcoin, than to launch and remove all doubt.
Only other people own shitcoins.
You can rail against shitcoins all day long and offend no one, as long as you don’t name a specific coin.
BCH is a shitcoin.
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