Fraud: Early Warning Signs of Fraud

The Ponzi scheme is a type of fraud called investment fraud. It includes "payment of so-called returns to funds provided by new investors from existing investors" (6). Investors usually promise high returns. Fraudsters attract new investors and repay old investors with new investor's money. The Ponzi plan was named after Charles Ponzi, who planned the residents to invest in stamps and made plans. Bernie Madoff is a famous, less popular Ponzi-type cheat.

Therefore, it results in how experts find fraud before they deceive. I am not an expert anyway, but in this article I will summarize a list of some red flags and warning signs. Because the SEC strictly controls the legality of ICOs and whether they are securities or not, the public must know how to implement due diligence. This is not your normal cloud funding, fraud is very rich, and many ICOs do not involve genuine products or anything else, except for hype. Actual code, you know what kind to be on GitHub. If the ICO project proposes open source code, empty or nonexistent GitHub is incorrect and a warning sign. The public block chain project relies on open source trust. In other words, it is uploaded to the repository so that anyone can check it. Block chain developers should be able to see if the published code matches the functionality specified in the project.

In August, the US Securities and Exchange Commission issued ICO fraud risk warning. Key points of warning: Unauthorized ICOs may invest in ICO promoting companies using "temptation of emerging technologies to persuade potential victims". With the same warning, they also warned investors "to pump off" fraud. Considering the attitude of waiting for the former ICO, SEC's news on this topic may not be heard again. And after a one month cheat warning, there is a new "network unit" message. According to this announcement, the network division says "use of dark network for fraudulent activity" and tracking market operation and confidential information theft.