There are new signals of fraud that are unique to crypto assets. We have seen white papers containing elements that contradict each other, contradictions, or even errors in the name of a company behind a project.
Some white papers are copied from other projects and quickly revised, leaving behind typos. Generally, an ICO is a unique project, and copying usually signals a fraudulent project.
Another indicator of potential fraud is a white paper in which specific passages are too complex to read easily. This should prompt the potential investor to question the seriousness of the project. The primary purpose of a white paper is to inform an investor, so abstruse language should never be used.
What’s more, because of the technological complexity of the work involved, the team behind the project is especially essential to its success. So if the project documentation does not include a description of the team, whether in the white paper or on its website, this absence should raise questions in an investor’s mind.
It is relatively easy to get in touch with the team behind an ICO to ask questions or obtain additional information about a crypto project. And if a potential investor cannot get in touch with the team, again, there is reason to question the project’s seriousness.
Encountering any of these fraud signals discussed does not necessarily mean that a project is fraudulent. However, recognizing these signals will make an investor better equipped to manage the fraud-related investment risks that are particularly prevalent in the crypto asset ecosystem.
