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Scam Experts or How Organizers of ICOs Become Victims of Scams

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Scam Experts or How Organizers of ICOs Become Victims of Scams

Investments in ICO projects are considered to be highly risky for investors, but development teams also regularly find themselves in the risk zone. Nikita Anufriev, the founder of DateCoin, shares his experience and talks about the difficulties he, like many other CEOS, had to face during the pre-ICO in his blog on Medium. These texts provide an opportunity to look at the ICO process from the other side.

Nikita, what do you think is the main problem for the guys who are just beginning to advance their projects?

This is a complex question, so it is quite difficult to give an unambiguous answer. Personally, for us, the biggest problem was the choice of those people with whom we had to work at the beginning of the journey, as this was the most difficult time for the team. There were many questions ranging from support in chat rooms and ending with the issuance of tokens and providing all the technical processes.

At the same time, numerous companies specializing in holding ICO “turn-key” lure the promises of multimillion-dollar investments, which in most cases turns out to be empty words.  Of course, unfortunately, such agencies are often in no hurry to fulfill their obligations. As an example I can give you our experience with some “experts” in marketing, who were not enabled to provide us with a marketing plan during several weeks, saying about the alleged violation of trade secrets. So that we were offered to buy a pig in a poke, making one hundred percent advance payment.

Thus, such companies actually train their skills of ”sales” mainly on you, not on potential investors – they earn from you, not with you.

Certainly, based on your experience, today you can give some recommendations for choosing a contractor for those who are just thinking about holding an ICO?

I will start with the fact that more likely there is no need in search for a contractor –  experts will come with a commercial offer themselves. Of course, you need to study it carefully and if it is designed for a wide audience, weed it out. This is my position. I strongly believe that the approach to such matters should be personalized.

When communicating with the contractor who says that he has already held several ICOs, it is necessary to mention your acquaintance with the CEO of one of the projects, which he worked with. Another option is to ask the contact details of those with whom he interacted. The reaction of the interlocutor will tell a lot.

The second equally effective advice is to pay attention not only to the reputation of the company but also to the business image and the level of employment. Agencies can run more than 15 projects in parallel, which we have personally encountered.  As a result, they simply do not have enough resources and time to do the job efficiently.

Fortunately, my colleagues and I are engaged in real IT business, and we have a large professional team. This enabled us to mobilize our own resources in time to meet key challenges. Otherwise, I have every reason to assume that we would not have reached the ICO if we had relied only on third-party contractors.

What type of expenses in conducting the ICO can be avoided in general or simply minimized?

For example, I am very suspicious about crypto-conferences. The fact is that among their visitors the percentage of potential investors is very low (this proves my personal experience and the experience of many familiar CEOs). Unlike the prices offered by the organizers of such events. For the sake of interest, compare the cost of participation in ordinary conferences and conferences with the root “crypto.” The difference is several times.

Greater efficiency can be achieved by attending events dedicated to the theme of the project – the money goes less, and the benefits more. With the exception of projects directly related to blockchain technology.

To reduce costs to a minimum, it is necessary to dive as actively as possible into all processes of the ICO and to close issues yourself.

What methods of project promotion are more preferable?

All of them. The launch of the ICO implies a large-scale information coverage of the product at all available sites. Of course, the Internet and related platforms are the most preferred. High efficiency is demonstrated by messengers, various forums, oddly enough. It seemed that the forums irretrievably are gone, but it was not so. Unfortunately, almost every step has to be paid, and crypto-platforms put up prices for promotion sometimes much higher than the authoritative media companies with a long history. The factors of the price of advertising in the classical media are well known today. With crypto-media this question remains open.

In general, the competent promotion of ICO-projects requires an integrated approach. In addition to groups in social networks, forums, YouTube and telegram channels, the description of the project is mandatory to be placed on ICO trackers.

Recent trends may be the most problematic. The fact is that maintaining a Telegram channel doesn’t imply feedback from subscribers, and its effectiveness is evaluated solely by their number. This fact is often used by unfair participants of the market, artificially twirling subscribers. There are cases when out of several thousand subscribers on the channel; the active part was represented by only a few people. But its management requires specific tools (content creation, ad placement in paid directories – Telegram, etc.).

You have mentioned ICO trackers, what difficulties can arise with them?

ICOs often face artificial underestimation of the rating. This applies equally to both paid and free services. After all, it is logical to assume that the project which occupies the top positions in the rating will be more interesting for investors. Representatives of the tracker artificially reduce the position of the project, and after that the team is offered to pay for its lifting. In our current business – data-service Denim – there is a certain analog, which is called raising the questionnaire in the TOP. This allows you to find a person with similar interests and goals much faster. Roughly the same in the rankings – pay for getting into the top and find an investor faster.

I even know some cases when unscrupulous “experts” of highly respected large ICO trackers were actually blackmailing project managers in order to impose their paid services on them and demand the brunt. By the way, such “experts” were immigrants from large Russian state-owned companies, which suggests that all the troubles inherent in the usual business are beginning to migrate to the crypto-world.

Generally, it is easy to find the tracker which sells places. For this purpose, it is necessary to take any project from the second or third ten and to compare its positions on similar services. If estimates are very different – this is something to ponder. It is quite possible that a good project posted on the platform would have low rating. By the way, even if you pay and return to it an objective assessment, it does not greatly correct the situation – sharp jumps do not help to raise the confidence of investors.

In general, sometimes strange things happen on trackers. This may be an artificial delay in the publication or an inconsistent and unjustified rise in prices. To avoid anexperience of this kind, it is necessary to cooperate with services whose reputation on the market is not in doubt.

Some words for our readers?

In Russia and the rest of the world, dozens of ICOs are launched every month, but along with them, there are new scams. Some of them I face myself, others my friends and acquaintances, but in any case, it is necessary to speak freely about all fraudulent schemes. Due to the fact that similar projects in crypto-world are still new to non-specialists, he or she has the impression that there are some scams. This is not so. There are not more and not less of them than in any other areas. It is necessary to pay as much attention to this topic as it is possible and then fewer people will be victims of fraud and the level of trust in good faith profitable projects will increase significantly.

 

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