A Government in Canada created a fake ICO website to educate investors on the dangers of cryptocurrency scams. Find out tips to avoid getting scammed yourself.
The TydeCoyn “Scam”
TydeCoyn purports to be a Canadian blockchain startup offering individuals the chance to invest in a “cryptocurrency token that marries tourism promotion and environmental activism.” The website claims TydeCoyn tokens can be used to pay “dozens of tour and trip operators in New Brunswick.” It promises investors “rates of return on each pre-ICO token at 85%, with that number expanding to 115%.” It also claims each purchase of Tydecoyn tokens “automatically sends a portion of the sale amount to one of several participating wildlife foundations or organizations.” There is even a YouTube video that claims the project “presents a new way to make tourism sustainable.”
So far, this sounds like the marketing campaigns of a lot of ICOs, which often promise to use blockchain for some type of local engagement (tourism, local guides) combined with profit potential (“tradeable” tokens) and a contribution to the social good (supporting wildlife foundations).
However, TydeCoyn is fake… but it’s not a scam.
Clicking “Invest Now” on the project website takes you to the FCNB website which lets you in on a surprise:
Fake ICO Scam Highlights “Red Flags” to Educate Investors
New Brunswick’s Financial and Consumer Services Commission (FCNB) created TydeCoyn.ca to educate investors “about the all-too-real dangers of participating in online ICOs.” Indeed, the website is populated with red flags that are regularly seen in genuinely fraudulent ICO activity — something the FCNB fully intended.
Red Flags an ICO is a Scam
There are several things on the Tydecoyn website investors can be on the watch for when researching new blockchain projects.
- Promises of guaranteed returns
Watch out for promises of “no risk, all reward.” Simply, it is not possible to guarantee an investment will be profitable. Anytime you see such language it is likely to be a scam. As the Tydecoyn website explains, ICO fraudsters “use fancy terminology and vague technical speech to lure consumers into a false sense of security, where they make it sound like the impossible is actually possible.”
- Limited information about the founding team and partners
Genuine ICOs make it clear who is behind the project. A lack of such transparency is a huge red flag. Potential investors have to watch out for ICOs that do not reveal contact information for founders and partners. As the Tydecoyn website explains:
“Serious companies need more than an IP address or a digital wallet address to do business with customers.”
Good investments have a transparent information flow.
- Gimmicks to make investors feel rushed
The fake Tydecoyn ICO website included a countdown clock clearly designed to make a potential investor feels pressured to quickly make a decision. If someone is trying to rush you into investing, “odds are that their “opportunity” won’t hold up under increased scrutiny,” explained the FCNB.
The central point the New Brunswick government wants people to take away from TydeCoyn’s fake ICO is investors should not participate in ICOs “unless they are emotionally and financially able to assume the risk of losing their entire investment.” The FCNB website points anybody who was fooled by the “scam” to its investor education material.