Apr 14, 2021

IDO Scams Part 3 - Analyzing Two Suspicious Projects

A few weeks ago we wrote two posts about scams you can encounter at initial coin sales. Now we can show you two examples of suspicious projects. We will explain what caught our eye to help you avoid such traps in the future.

1️⃣ Poplink Oracles

When you look for new opportunties to invest in a high risk coin you often come across crypto projects you have never heard anything about. Imagine you see such a new venture and you see this:

Man holding money in his hand

You check the mentioned investment funds, see a lot of well known projects in their portfolio  - thus their investment means they vouch for this project. You also see the project has 40k members in its Telegram channel. It‘s not a hidden gem any more, but seems popular and respectable. But then you see the project is not affiliated with any launchpad or other partners, which is atypical for up and coming crypto stars. So you decide to google the investment funds to see what they think of the project and you find this:

Two tweets about funds not investing in a startup

We have seen crypto projects claiming to have investors who do not mention the investment anywhere. But this is the first time we have seen an alleged investor actively denying the existence of the investment and warning everyone about the company. Having two investors do this, including one who was allegedly „leading the round“ means the crypto project is lying in its communcation. This of course begs the question if it is telling the truth to its community. The team is obviously anonymous, this however also happens with legit crypto projects.

We also saw the team does not have a Telegram chat or another discussion channel with the community and that it is now asking potential retail investors to just send money to an address.. That's a lot of red flags right there

Screenshot from Poplink Oracles Channer

A team asking you to send money to an address should provide proof the money is secured there and cannot be just withdrawn and stolen. While there were successful projects with closed communication channels in the past, e.g. BSCPad, in this case such distaste for discussion fit well with the investment lies. The 40k people from the Poplink may be partly bots, but some of them are real - one of our friends retweeted a Poplink tweet. Don‘t be like them and do your own research. While there might be a chance Poplink amounts to something, it is indeed rather small.

2️⃣ Smartpad

This project claims to want to build a cross-chain platform for new crypto projects to fundraise. While there are no outright lies here, the venture raises very many questions. Right now it has a general „smart paper“, a website to fundraise and a referral program for fundraising. It has a Telegram chat, which is open to discussions.

Smartpad website, looks like scam

But again there are questions. The team is anonymous, though probably at least partly based in the Ukraine. The biggest question is about the funding. The team alleges to have gathered 2773 ETH at this point. The sale is supposed to last all in all only a few days and in one day the alleged fundraised balance rose by a few ETH. These numbers do not add up. Furthermore the team alleges in its tokenomics that the fundraising round will amount to 8% of the tokens. The alleged 2773 ETH is $6.5m at current prices. This would put the market cap for the project token at over $80m. This is a number for an established launchpad, not an early stage startup with no MVP and a small community of supporters. This is again quite suspicious. Also when investing in early stage crypto projects people count on returns of at least x10 and with an $80m market cap there is not a lot of room to grow.

Due to the referral program there are youtubers shilling this project. If you hear about the project from such a source, be sure to do your own research

As mentioned previously, in these bullish times even projects with multiple red flags sometimes produce extremely good returns for early investors. However even when betting on such very high risk projects it is still reasonable to minimize the danger of failure as much as possible. Do your own research and ask questions before aping in, just like we did in the two above mentioned cases.

And check out the Security Score in our crypto exchange comparison to find safer ways to invest your hard earned money into crypto.