Blockchain: Is it a hoax?  113

scam coins and also recommendations to assist you to avoid falling victim

to scams and fraud.

Disappearing with the investors’ money

This is one of the classic scam/fraud tricks. As the ICOs are not regulated,

you as investors are not protected either by local financial regulators. The

ICO developers will wait till the coin offering is at a set market cap and

then walk away with the money. In some cases, they get arrested; however,

sometimes they are hard to track and even if they are arrested, recovering

money becomes very hard.

• Recommendation: Always read the whitepaper of the ICO and

research the team and the project. The roadmap and project delivery

timelines should have some confidence level of success. Always avoid

any ICO investment if the team looks shabby, the project roadmap is

not clear and there is no transparency on how the money raised will

be invested in project delivery.

Pump and Dump the Coin

You must have heard the term Pump and Dump in relation to cryptocur-

rencies. This is the approach of buying a hefty sum of cryptocurrencies by a

group of investors at the same time to increase the price and then sell a hefty

sum of crypto to decrease the price. This process gets repeated multiple

times in a year to fluctuate the price.

In relation to ICO scams, developers of the cryptocurrency influence the

prices of the coin by highlighting the issues with the platform or codebase

like security flaws/lost coins etc. to push those prices right down and buy in

when the prices are rock bottom. They then communicate to social media

Figure 4.3  List of some dead crypto coins.