ICO is an acronym that's often seen these days. It stands for "initial coin offering" a type of crowdfunding whereby a company seeks capital from private investors in return for cryptocurrency.
However, potential investors should be aware that such offers can often be dubious, consumer rights experts say.
Investors can be seduced by the offer of being in at the beginning of a new, promising cryptocurrency that could potentially rise hugely in value, but often, all that glitters isn't gold. Here are some warning signs to look out for:
A request to recruit others
Some ICOs promise investors more rewards if they can recruit other investors. However, offers such as these are often just a disguise for a pyramid scheme.
Sparse information
Information about those behind an ICO can sometimes be lacking. For example, there might be no contact details for specific people on the company's website, or its headquarters might be listed as being in several different countries.
Also, documents providing a factual overview of the risks and opportunities involved are absent or incomplete.
Bad terms and conditions
These can contain clauses that put consumers at a disadvantage. For instance, providers might reserve the right to change the fees and conditions at any time without notice to the members, or the right to close user accounts at the company's discretion. — dpa
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