Of the numerous ICO scams of 2018, the Centra coin (AKA CTR coin) scam was one of the biggest; it was even listed on Binance. Before the scam was discovered, they convinced investors to put in more than $30 million into their coin offering, which also partnered with big names and celebrities. The CTR scam was quite huge. What can we learn from it in order to avoid falling for such crypto scams in the future? First, we will learn more about the CTR coin.
Brief background on the CTR Coin
The Centra coin came with an amazing, innovative promise of offering the world’s first cryptocurrency debit and credit card that allows users in more than 100 countries to transact with their crypto in the same way they do with the regular fiat currencies. More so, the founders claimed that the CTR coin would have insurance for stored assets, and would also be linked to a wallet that works with the major cryptocurrencies, such as Bitcoin, Ethereum, and Litecoin.
Apart from the popular endorsements of celebrities like DJ Khaled and Floyd Mayweather, they also claimed to partner with leading fintech companies, MasterCard and Visa. Later, things began to get fishy as the cryptocurrency community started to have concerns about the offering – things like their fake Twitter followers and profile pictures.
The CTR coin was only promoted on paid press releases, where the founders posted faux organic comments. The founders, having already raised more than $30 million worth in Ethereum, denied all accusations raised. Their first big blow was in October 2017, when Visa, via the New York Times, officially denied having any collaboration with the coin. Following this, the ICO simply removed all Visa references from their site. About the fake followers and profile pictures, they blamed amateur freelancers.
In April 2018, the police arraigned two of the coin founders – Sohrab Sharma and Robert Farkas – for securities fraud. Soon after, major exchanges began to delist the coin, and when Binance finally delisted it, the coin lost all its value. The SEC are still trying to force a full refund of investors’ money, and the celebrities that endorsed them are facing legal action.
What can we learn from the CTR Coin?
Unfortunately for the investors, the CTR team are still yet to refund their investors. However, moving forward, before investing in any new ICO, to avoid falling for scams, here are some things to do.
1. Research the founders and team
With LinkedIn, Facebook, Google (also Google (reverse) image search, and so forth, the internet has made it easy to research people to test their authenticity. Before investing in or endorsing any project, you have to use all these tools at your disposal.
Additionally, you can also research the company registration to see the previous projects of the founders and their legitimacy. If you notice any red flags, do well to relay it to the crypto community.
2. Research the company
In addition to learning about the team and their significant claims, before you invest in a new Blockchain project, you should also lookup and read all you can about the company. If all you find are paid press releases, then there is a chance that regular sites and blogs do not fully trust them. Right now, only very few projects do not run paid promotions.
3. Research Claims made by the project
Every ICO has their unique selling points. Before buying these, you should make out time to confirm these claims. In the case of the CTR coin, they claimed to partner with MasterCard and Visa. If the claims are genuine, there must be supporting press releases on it. If there aren’t any, you should think again about investing there.
To go the extra step, you could contact the said partner(s) to verify the legitimacy of the claims. In any case, know that companies can make any claims, but it’s up to the investors to do their bit of homework before believing them.
4. Celebrity endorsements are overrated
I would never understand why people fall for celebrity endorsements. The celebrity might be great at their craft or sport, but that does not mean they have superior knowledge about a project than you do. Many celebrities have been found to endorse sub-standard or outright sham products. Understand that they are just paid to promote those; hence a celebrity endorsement should in no way influence your thought process.
The many cryptocurrency scams are a strong indicator of the need for regulation in this sector. These scams are designed to hook people in and make a way with their funds, and regulation will check these but may not fully stamp them out. Therefore, to be confident you are not making a mistake investing in a new coin offering, you should endeavour to take the above steps to safeguard your funds