It's good to see that the SEC is serious about taking action against scam ICOs. Blockchain technology has a lot of promise to improve the efficiency and delivery of many services in both the public and private sectors -- with improved security, speed, and trust. But scam ICOs are a big detraction from the promise of blockchain.
The SEC has filed charges against 2 ICOs founded by Maksim Zaslavskiy. One is a "coin" to presumably invest in real estate, and the other is a "coin" to presumably invest in diamonds. Seriously...? Who even invested in these??
Last month Thoughtchain published an article: 7 Factors to Consider Before you Invest in an ICO. Here's a summary of the 7 factors:
What is the utility of the token? Does it do something that really requires a token or is it just a means to take money from you?
Are investor funds securely escrowed and governed by a smart contract?
What are the economics of the cryptocurrency that will determine it's value?
What are the qualifications and credentials of the founders? How transparent and accessible are they?
Is there a minimum viable product, and has the code been published?
Has the code been validated by an unbiased source such as ICO Monitor?
Is there a reasonable vesting period for the founders and advisers?
"RECoin" and "Diamond Reserve Club" fail miserably on most everything, and they don't even pass Rule #1 so wise investors should have never been duped.
Investors beware. If it sounds too good to be true, it probably is. If the "coin" or "token" has genuine utility and a solid team, then explore further -- but always (over)do your due diligence.
Please share your thoughts on this topic. How do you spot scam ICOs? What are other tips for potential investors?
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Epic Post m8. Well thought
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