Originally the Crypto $hit List was created at the end of 2017. The market was experiencing exuberance and almost every cryptocurrency had an unrealistic evaluation. As I poured over countless ICOs, I noticed nearly 95% of them were horrible concepts, if not scams. Now that the market has corrected, these worthless ICOs have run their course, exposing their true nature. Altogether this has cost investors billions of USD. Despite learning from prior mistakes, investors continue to dump money in ICOs. Each day a new project launches, and each day an investor throws away capital.
I’ve designed this list to protect investors from scams.
Scams and frauds are bad for digital currencies. I am a true supporter of blockchain technology. I get sick to my stomach when I see foolish investors throw money into an obvious fraud. I’ve created this list to protect investors’ capital and help clean up the cryptocurrency market. It is my goal to educate all investors how to spot fraudulent ICOs. In doing so we can eliminate the money flowing into these projects and make running a scam no longer profitable.
Investors need to worry if they own a security token (VERY BAD).
Another issue with ICOs is how they are structured. ICOs in their nature are a form of venture capitalism. To lure in investors many projects set up incentives to make them appear lucrative. In doing so, many ICOs become structured under the definition of a “security”. This is a big deal as the SEC is on a mission to shut these projects down. By owning security token you are putting your capital at risk. Any coin deemed a security will lose its trading privileges erasing its market value. The SEC has put out publications over what constitutes as a security, but it can be very confusing for anyone not strongly familiar in the area.
My short list of red flags.
Always do your own research before investing. Before dropping a penny into an investment, make sure you know as much about the project as possible. Doing so will allow you to look out for potential red flags. I have created a short list of red flags I look at before investing in a project.
- Structure coin to pay investors a return (this constitutes as a dividend).
- Give investors the ability to vote based on number of coins they hold. The SEC views this as a proxy vote, similar to the power stock holders posses.
- Raise funds before any code is created. Projects raising funds with just a whitepaper is a major red flag, not just as a security but as a scam.
- No whitepaper. This is a huge red flag, run from projects like these.
- No clear team members, or fake social accounts. Don’t fall for a catfish, make sure team members are real.
- Funds are not put into an escrow, or have an “all or nothing” smart contract.
- “Decentralized” project has a CEO. I think decentralization is necessary for currencies, but I do not understand why a decentralized token needs a CEO. Often these are people trying to start a company and using funds raised from a project to jump start their business.
- Project leads make outrageous claims about returns, functionality, etc.
- Host press conferences
Now, The $hit List
#3 – LaborCrypto
LaborCrypto is currently in its pre-sale and is claiming to be, “The Global Freelance Peer to Peer Ecosystem that Shares Revenue.” This statement on its own was enough to scare me off as an investor. Not only does peer to peer revenue sharing sound like communism, it is obvious this project is using crypto buzz words to sound technical. This project is built around the freelancing community and is joining the pack of thousands of other freelance websites.
How it works
Someone buys LaborCrypto so they can post a freelance job on their site. They use LaborCrypto to pay the freelancer for completion of the job. Holders of LaborCrypto are rewarded by sharing the revenue collected from transaction fees. Not only is LaborCrypto joining the highly competitive marketplace of freelance posting websites, they are trying to back their project with a lousy token. Several very popular websites already exist that can perform the function of LaborCrypto. These sites pay people in the world’s most popular currency; USD.
It will be extremely difficult for them to out compete their competition, and at the same time get a large enough following to back LaborCrypto. Without a backing, the coin will be viewed worthless in the eyes of most people, and it is hard to imaging someone doing manual labor for a digital token with no value. Receiving a paycheck in popular cryptocurrencies is currently a bad idea (too volatile). Receiving payment in LaborCrypto is an even worse idea.
Final analysis: LaborCrypto = $hitcoin
I’m not calling this project a scam, but I see too much difficulty in outperforming popular freelance sites that exist. Even more so, LaborCrytpo is not a revolutionary idea, and I find it impossible for it to gather enough of a following to give it value.
#2 – LendChain
LendChain is making an attempt to join the crypto financial industry by creating a token that allows for individuals to administer small loans and collect interest. LendChain is joining hundreds of other coins with the exact same concept and has serious red flags that should make any investor worried. Red Flags:
- First thing you see on the website is a callout for buying “Point Cards for LV Tokens”. Not only do they have an ICO token, they are sell “point cards” in some sort of confusing bonus structure. Set ups like this make it easy to rip off investors.
- Team members do not have any social media links. Besides a short bio on the LendChain webpage, I could not find out any information about the team. Not a good sign that when the top team members do not have linkedIn.
- No proof of an actual token. Neither the website or the whitepaper provides a link to tokens github page. I was unable to find what blockchain they are using for the ICO. This is a huge red flag!
- Whitepaper contains grandeur language guaranteeing success:
– LendChain Whitepaper
Final analysis: LendChain = Probably a $cam
While I cannot be for certain that LendChain is a scam (not a lot of information about them) I am going to stay far away from this ICO. Too many red flags for me to feel comfortable as an investor. Also, the concept of their token is nothing new, and I think the personal loan tokens are overplayed. Owning debt has its own inherit risks and many individuals do not have enough background knowledge of the debt industry. If you are considering participation in the LendChain ICO I recommend performing serious research before hand.
#1 – TripBit | The $hit Coin of the travel industry
The instant I saw this coin’s website I knew it was a scam. I see more red flags in this project than almost any ICO I’ve reviewed (I typically review 7-12 ICOs a week). Beyond the fact that TripBit is most likely a scam, the token’s function lacks any use. TripBit is creating (or so they say) a token that can be used to pay for all travel expenses. It claims to be more convenient by allowing customers to book their all their travel expenses at once and with one token. While this almost appears logical, anyone can easily see through this. Buying BTC or ETH with fiat, then hopping on an exchange and converting it to the TripBit token is in no way convenient. Not to mention, everything TripBit is trying to do can already be done.
Why would someone pay exchange fees to purchase TripBit token to pay for a flight? Wouldn’t it be easier to pay with fiat? If you really wanted to pay with crypto it would be far easier for both parties to use BTC or ETH. Couple this fact with these glaring red flags and you’ll understand why I’m staying as far from this project as possible.
No mention of the TripBit’s code
Good projects have a technical section in their whitepaper. Transparent projects have links to their githubs so investors can be sure the company is actually creating a token. TripBit has neither. Not to mention their ICO smart contract matches 1075 Ethereum smart contracts. This is a serious red flag. They have no technical mention of their code in their whitepaper and they are using a generic ERC-20 fundraising contract. These contracts are easy to set up and only required the creator to copy and paste the code into solidity (the reason why there are 1075 exact contracts).
The ICO proceeds appear to be set up as a Team payout
The bankroll is clearly structured as a payout fund for the team. The hard cap for the project is 40 million USD. Multiply the hard cap by 40% and TripBit gets a whopping 16 million USD to spend on things like CEO salaries, trips, restaurants (you get the idea). Even more frightening is development only receives 1/3 of the total money raised. Besides the ICO website, BitTrip does not have a functioning platform and has no proof of any actual code. I would think any company that does not have a working product and is serious about disrupting an industry would focus most of their funding on development.
Decentralized project has a CEO
Why does a decentralized currency need a CEO? Decentralization is often used as a buzz word to lure investors into crappy projects. Don’ become a victim to crypto jargon.
Team Photos Look Like They Are From Myspace
Maybe I’m over looking this fact, but I find it odd that the alleged crack team, who is developing a token to disrupt the travel industry has an entire team that looks like they are in high school. Not to mention the their photos that look like they’ve been hijacked from myspace. If I’m operating a company that plans on raising millions of USD, then I’m going to deal out some cash to get a professional photo.
But in all seriousness, there are huge red flags with the team members
- Besides a linkedin (and very few members have a linkedin), there are no other social links to team members. Usually team members have a more transparent background since they are asking to raise millions of dollars. They create this by have multiple social media accounts so investors can be assured they are real.
- Less than half the team has a linkedin (the only form of social media on their site), including the co-found who’s linkedin account “no longer exitsts”. Projects with non-transparent team members are red flags and it would be wise to steer clear of this project.
Final analysis: TripBit = 100% $cam
Now I can never be for certain that an ICO is a scam, but there is also a chance the Nigerian Prince who contacted me through email will actually send me twenty million dollars if I give him my bank account and social security number. Even if this coin is real and the team is actually attempting to disrupt the travel industry, I still don’t see it succeeding. The premise of their platform is devised to make paying for vacations easier. While booking and paying for vacations are a hassle, it is not a big enough deal to create a whole currency around it. Lastly, there currently exists far easier and more efficient methods (including traditional fiat methods) to paying for vacations.
My final thoughts:
If you like pissing away money TripBit is an ideal option. But if you’re like me and want to make serious returns off of ICOs then there are several awesome options and we will send them directly to your mailbox for FREE.
Investing in ICOs can bring life changing money.
But finding investable ICOs are rare. Most projects out there are either really bad or simply a scam. The heads of these ICOs have mastered the ability of camouflaging their projects into fooling investors. Don’t be a victim, join our mailing list and receive REAL PROJECTS that have been reviewed by our team and have our stamp of approval. We only believe in picking winners and hold projects and their teams to high standards.
Thanks for reading, this is one of many $hit Lists to come.
Good luck investing,