The National Internet Financial Risk Analysis Technology Platform (IFCERT) published a statement on May 18, 2018 in order to educate its citizens on common cryptocurrency scams, defining the space’s common scams. During the investigations, the IFCERT’s revealed a common of 421 cryptocurrencies, all displaying attributes of a fraudulent business model. Nevertheless, the watchdog affirms that most of the trading platforms are hosted on overseas servers, making it difficult to track their exact location. The fraud platforms, in the whole, were parted into broad divisions.
Promoters of Pyramid Scheme Cryptocurrencies provide a bogus guarantee of significant yields and claim to offer handsome commissions to investors who can further bring in more investors. As demonstrated below, the top-tier members make the most profits, with the incentives decreasing as one trickles down the pyramid. In terms of benefits, investors are offered both a “dynamic (rewards in proportion to money invested)” and “static (fixed)” incentives.
For fraudulent ‘Hard Forks’, the IFCERT has marked an absence of “genuine code,” apart from the total lack of a technical framework to successfully run a blockchain. Nevertheless, promoters deceive naive investors, and promise guarantee returns on the guise of a ‘hard fork’, that would force the coin’s value, and “never fall.”
IFCERT also claimed that the cryptocurrencies issued by OTC-Only Platforms are extremely phony, and not tradable on any cryptocurrency-exchange apart from their own. These determined coins are allegedly controlled by institutional investors, who manipulate the digital asset’s price by purchasing large amounts in quick succession, thereby causing a “pump,” and deceiving investors who can mistake it as a real store-of-value.