Late news: Turkish Crypto Exchange Exit Scam
The concept of an exit scam is simple: a company accepts payments for orders but is not going to send them. This is done by both fly-by-night companies and companies with a good reputation. In simple words, an exit scam is a fraudulent practice where a project collects money during an ICO and then disappears.
This is how an exit scam looks like:
Promoters launch a new cryptocurrency platform, promote the concept, buy public opinion, and shill the project in every possible way. When an ICO attracts money from investors, a pseudo-business either demonstrates activity for some time, or immediately closes down, and the team disappears with the money.
Due to the decentralized and unregulated nature of the ecosystem, it is difficult to track down scammers who cheat investors. It's also very easy to organize an ICO: you don't need a big brain to create an ERC-20 token or create a website, and young platforms and channels will gladly advertise the project for little money. Add young investors who did not study to be financiers and were blinded by the success of early ICOs.
The Dead Coins website shows 1640 coins that were found to be fraudulent as of April 2021. These are Adhive, ZEROCOIN, Alpencoin, Bitcoin Game, Yfdex.Finance, Stakeit Token, Bytether, and many others.
Now people are more informed and wary of ICOs. But this is not the only type of exit scam. As you see, exchange fraud is the new trend.
If you follow me long enough on Publish0x you'd know that I like to repeat: "Do not keep coins on an exchange platform." The exchanges are either being hacked, or their founders disappear with all the money. Some exchangers gradually curtailed their activities: they froze withdrawals, blocked entrances, and then completely disappeared with money from users' accounts.
How to protect yourself from exit scams?
Pay attention to the team. I would not trust a project behind which are people without any experience. Not only for scam reasons but also because of the inexperience of such a team.
Be wary of unrealistic promises.
Pay attention to the size of the softcap. Small amounts are easy to raise with a small advertising campaign.
Check GitHub as most crypto projects should be open source.
And most importantly: “Don't keep your coins on exchanges”