FBI investigator, Steven M. D’Antuono, Section Chief of the FBI’s Financial Crimes Section within the Criminal Investigative Division, has listed the main characteristics of a scam ICO in an interview with ThePaypers.
According to the FBR, potential investors should avoid projects with the following features:
- Misinforming about the experience of project managers,
- Too aggressive marketing,
- Unrealistic promises of future profitability.
“The fraud scheme may vary, but some of the consistent threads running throughout most ICO scams are misrepresentations regarding the principals’ experience, misrepresentations regarding industry’s interest in the ICO, and misrepresentations regarding the coin’s probable rate of return. Like any investment product, rates of return can never be guaranteed and if it sounds too good to be true, it probably is,” Steven M. D’Antuono said.
Steven M. D’Antuono recommends verifying that the ICO has a registration and the laws that apply to the sale of tokens in the licensing jurisdiction. Potential investors should practice good due diligence by checking the credentials of anyone promoting an ICO. This can easily be accomplished by checking the background and registration of any individual recommending an investment, including ICOs, by using the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck system.
