ICO Scams

An Initial Coin Offerings (ICO) is an unregulated means of crowdfunding via use of cryptocurrency, which can be a source of capital for startup companies. In an ICO a percentage of the newly issued cryptocurrency is sold to investors in exchange for legal tender or other cryptocurrencies such as Bitcoin. Since ICOs are unregulated, scammers have free rein to tell you anything to get your money. Don’t let these scammers take advantage of you.

China has recently banned companies from raising money through ICOs.

ICOs are not all scams.  They are a new way to raise money. A guiding principle for ICO investing is to be skeptical. Challenge each claim that is made to you.  ICOs are crowdfunding.  Just like anyone can create a Kickstarter project, anyone can create an ICO.

Does the ICO help create something valuable or is it just a get rich scheme?

Here is a detailed breakdown of what to watch out for when putting your hard earned money into an ICO:

I am going to use a recently shutdown ICO scam called REcoin as a real world example below.

1. Their Focus Is Making You Money

REcoin provides both investors and the average person a safer, more secure and superior alternative to storing their wealth in the form of digital currency.

The purpose of a legitimate ICO is to raise money for a project and not to make you money. If the project is successful, you may make money.  ICOs are high risk.  Any ICO claiming low risk is a scam.

Don’t fall for the can’t-miss, once-in-a-lifetime, guaranteed-win opportunity.

2. Ridiculous And Unsubstantiated Claims

REcoin is a new cryptocurrency alternative designed to accommodate a wide range of financial transactions and investment goals. Its security is ensured through the use of one of the soundest and most reliable currency backings there is real estate.

REcoin claimed that the coin would be backed by real estate but there is absolutely no evidence that there is any real estate owned by REcoin or even that anyone at the company has any experience dealing with real estate.

3. Buzzwords And Little Substance

There are several economic and technical measures that make REcoin an attractive means of payment for real estate transactions. These technical measures will be carefully managed, tracked and authenticated through blockchain technology. An international team of lawyers and programmers has been working relentlessly on creating solutions for holders of REcoin, allowing them to enter into smart contracts in the rental of real estate (with the addition of sales contracts later). They are also actively developing the support ecosystem and creating partnerships with various Internet platforms.

REcoin had no major real estate partners or financial partners. The whole thing was completely void of anything tangible.

4. No White Paper Or The White Paper Is Nonsense

Click Here for the REcoin White Paper.

REcoin’s whitepaper and official website makes all of the following guarantees:

  • Activities are in full compliance and governed by US law
  • 100% of proceeds from REcoin sales (minus maintenance costs) are invested into real estate
  • In worst-case scenarios, the REcoin Trust guarantees a liquidity ratio of up to 70% of the currency’s market value
  • The REcoin Purse is secured by “the latest cryptocurrency tools and designed to be user-friendly and convenient”
  • New technical and economic solutions will be developed for the benefit of REcoin users
  • In terms of the 70% liquidity guarantee, the REcoin whitepaper compares that number to the Federal Reserve’s requirement for liquidity ratios for financial institutions, which is set at a maximum of 10%. Given that, the 70% number for REcoin seems like a safer investment.

5. No Available Code

If the project has no link to the code or if the project is nothing more than a clone with a few changed lines of code, it’s not worth your money.

6. Lack Of A Quality Team

Do the team members of the ICO have a history of creating quality projects. Check to see if the team members are actually aware of the project as scammers may use famous names just to get people interested even though these are not part of the team.

Are paid celebrities used to promote the ICO?

Maksim Zaslavskiy

CEO, Founder

Max Zaslavsky, the founder, and CEO of the RECoin Group was born in Ukraine in 1979. In the early 90s, his parents moved to New York. Received MS in finance from Baruch College in 2003. By the time, he was finished with higher education he emerged an actual real estate opinion leader. In the late 90s, Max had realized the potential value of the IT sector and decided to combine his extensive expertise in real estate with the overwhelming digital technologies potential.

Having become an expert in equity management, constantly volunteering and participating in many different charities Max was not entirely fulfilled. He pursued law, and having received his LL.M. (Master of Laws) in 2005. Having extensive background in investment management and community service, it was obvious choice to join the investors and real estate entrepreneurs on a single platform with a blockchain based monetary system.

The SEC said REcoin misled investors, saying it had a “team of lawyers, professionals, brokers, and accountants” who would handle all real-estate investments when no such team existed.

7. Poor English

8. Virtual Office And Fake Pictures

RECoin said they were based at the following address: 7260 W Azure Dr Ste 140, Las Vegas, NV 89130. This address is a small mailing store that provides mailbox services for people.

Most scams do not have an actual office. They use a virtual office and fake pictures to give the impression they have an office.

9. Recruiting Makes You Money

“101 REcoin – Yes this is a shameless referral link but if you are thinking of buying some coins please use referral. 6%!”

Many scams focus on you recruiting your friends and family to make money from their investments in the ICO.

Here is an example of how ICO scammers move their victims from one scam to another:

IMPORTANT!!! URGENTLY!!!
OFFICIAL STATEMENT FOUNDER AND CEO OF THE RECOIN GROUP MAX ZASLAVSKY

My fellow REcoin investors, real estate professionals and cryptocurrency enthusiasts!

For the last year, we’ve strived to tune the communications channels between the REcoin team and you, our investors and partners, in such a way that would create unbridled levels of openness in information exchanges to help you get genuinely excited about the REcoin project. I’m proud to say that it’s worked out very well so far and I hope we’ll manage to keep the atmosphere of trust that’s been well established within our community clear of any conjectures.

On August 7, REcoin went live raising over $1.5 million in direct REcoin token purchases during the first three days of the presale. The trust in our project became so vast that another $2.3 million in expected earnings were generated as a result of the REcoin pre-sale success.

Unfortunately, at that point the US government did what it does best – interfered. In no uncertain terms, it let us know that we’re not allowed to take steps to maintain the level of liquidity of our real estate holdings to keep your investments safe and secure, and our community truly decentralized and rid of any outside influence.

However, the good news, my fellow REcoin holders and investors, is that we’re not going to let your tremendous faith in our collective project, its strategic goals, and tactical objectives go to waste. We all want to make the world a better, safer, freer place where we don’t have to rely on the quirks of The Man to advance our ideas for the benefit of the entire planet.

With that in mind, I’m proud to announce the creation of the exclusive Diamond Reserve Club with tokenized membership for current REcoin owners. After all, the diamonds are forever, especially stored in secure locations in the United States and fully insured for their full value. This way they are truly not susceptible to any government manipulations.

Diamonds have high aesthetic value and are relatively easy to transport. Diamonds are actually the most concentrated way to store wealth. A high quality diamond with a mass of 2-3 grams can have the same value as 100 kilograms of gold.

Diamonds are quite scarce and natural colored diamonds are the scarcest among diamonds. Out of more than 120 million carats that are mined every year, only less than a quarter of them will be of gem quality. Out of gem quality diamonds, only one in a few hundreds of thousands possesses enough color to be classified as a natural fancy color diamond.

The Diamond Reserve Club members will be able to exchange their tokens for physical diamonds on the Club’s platform in real time and hassle free.

The Club members remain entitled to all the opportunities and benefits they were promised at the time of joining the REcoin community. All the referral programs remain in place (and we’ve lifted the condition of having a real estate broker license to be able to take advantage of them), you’re now going to be able to use smart contracts not only in real estate but in every facet of commerce, in which the Club is going to be engaged. All the bulletproof technological aspects of the token, the hedging, the mining, the sidechain policies, the partner programs and charitable activities – as the “Led Zeppelin” would put it, “The Song Remains The Same”.

Naturally, everyone of our investors is entitled to a full refund, should they wish to claim it. Your funds are safe and secure, and are available for withdrawal at any moment, no questions asked. But we do encourage you to stay with the project and watch your tokens, so to speak, turn into diamonds.

All of your REcoin holdings will be seamlessly converted into Diamond Reserve Coin (DRC) at the rates favorable to you, my fellow REcoin investors! As our early supporters who gave the vote of confidence to a barely feathered startup, saw true value in REcoin and purchased first tokens as soon as the pre-sale started, at the time of conversion of your REcoin into DRC you get our undying gratitude along with 10% bonus in DRC. Just as is REcoin, DRC is powered by blockchain technology, offering a superior alternative to storing value in fiat currencies and we really wish to see you continue to take full advantage of this amazing technology.

As a REcoin holder, you are automatically entitled to the multi-level membership in the Diamond Reserve Club, meaning, the more tokens you own, the greater your access to the membership benefits is going to become.

For instance, a certain amount of tokens will make you eligible for the exclusive right of full access to the Club’s most valuable partnering platform – the 101Lego creative communications holding with all of its know-how available to you on all of the holding’s 18 (eighteen) platforms. You get to draw from the well of wisdom end experience of the 101Lego’s stellar staff of professionals, its extensive client list is at your disposal, its affiliate partners are waiting for your call, and its database is ready for your business.

As you keep climbing the token ladder, you’ll get full access to the rest of the DRC ecosystem, unlock all platforms and gain access to exclusive listings. You’ll be able to take full advantage of such highly sought-after digital products as smart contracts and pay for them with your newly acquired autonomous digital financial instrument – the Diamond Reserve Coin.

Stated clearly, the goals of the Diamond Reserve Club are:

– to offer unique opportunities and benefits to former REcoin holders, current Diamond Reserve Club Members;
– to indefinitely prolong the lifespan and development of the Diamond Reserve Coin to increase its liquidity, visibility, enhance its credibility worldwide;
– to propagate the DRC as a new blockchain based proprietary instrument for a variety of financial transactions, database, and listings creation;

The Diamond Reserve Club reserves the right to carry out all necessary actions with the aim of creating and developing the DRC image and supporting its reputation by carefully screening each DRC member. Such actions include:

1. Hedging DRC membership tokens by physical diamonds;
2. Creation and development the Diamond Reserve Club’s infrastructure;
3. Organizing of private and club events, conferences, talks, seminars, gatherings for the DRC members;
4. Search for partners and expansion of service packages and offers to the DRC members;
5. Consulting services to the DRC members;
6. Evaluation and admission of affiliate partnerships into the DRC ecosystem;
7. Prequalifying and auditing applications for the creation of DRC sidechains;
8. Development of technological solutions improving the DRC software as well as further enhancement of the blockchain;
9. Development of new templates for smart contracts, databases, listings, and the expansion of their use;
10. Involvement in all charitable, legal, social, and socio-economical aspects of the DRC community life;
11. Promotion and support of the Diamond Reserve Club and enforcing the compliance with Club’ bylaws, Membership Rules, and Regulations;

It is a glorious and exciting time, everybody! I hope we all enjoy it, cease the opportunity it brings us, and remain partners, colleagues and friends for many, many prosperous years to come!