What to Do If You've Fallen for an Exit Scam
So you've fallen for an exit scam and potentially lost thousands of dollars. Now what?
ICOs are extremely risky investments, and with great risk can come great reward. The top-performing ICOs have given investors returns as high as 200 percent. Many ICOs are made by legitimate companies that want to raise funds for amazing new technology and promising advances in e-commerce.
However, there's been a bad trend afoot.
For every well-meaning ICO, there are people who are looking to scam investors out of their hard-earned money. One of the most common ways that people use Initial Coin Offerings to steal investors funds is through an exit scam.
Are you now asking yourself, "What's an exit scam?" Exit scams mimic honest ICOs that raise millions of dollars for good causes, but they have a twist. As the fundraising continues, the ICO never gets to token stage. In fact, many exit scams just involve "CEOs" who vanish once they get enough money to fold the company.
Over $100 million has been stolen via exit scams targeting hopeful investors. So, what should you do if you've fallen for an exit scam? Here's what experts suggest.
Before you do anything else, stop your investments.
If it's at all possible, pause any investments you have in the potential scam. Try to pull out any money you can, and if you can't, do your best to put all your crypto wallets on pause.
If you've fallen for an exit scam, you might also have other issues to worry about—include break-ins to your wallet. If you are worried about your funds being stolen, remove your money from crypto and keep your credentials under lockdown.
Reach out to others who may have been affected to confirm what's going on.
The good thing about the cryptocurrency community is that it's tight-knit, and you can always rely on the community to keep others posted about facts. If you think you fell for a scam, hitting up forums is the best way to figure out if you are a legit victim or just skittish.
Going on forums to alert others will help word get out about sketchy dealings, and can also help you find resources that you can use to track down money. You never know; a random Reddit user may be able to point you to the right jurisdiction to get your money back.
Try to gather as much information about the scammers as possible.
A surprising number of exit scammers will put their own face on the fake product they used to bilk their investors out of cash. They may also rent out real estate to try to appear as legitimate as possible.
The more you and your fellow victims can uncover about the scammers and their identity, the more likely it is that you will be able to bring them to justice and potentially help you figure out how to recover your cryptocurrencies—or at least try to.
Double check to make sure the ICO didn't just fail.
ICO failures can and do happen. Sometimes, even with a decent amount of funding, the companies that were fundraising don't work out. Take a look at the white papers and the behavior of the ICO's company before you call the authorities.
If it seems like the company tried and failed to deliver, you may just have a failed ICO. On the other hand, if you're noticing red flags in retrospect, you've fallen for an exit scam.
Alert the authorities.
The SEC is in charge of monitoring investments and keeping an eye on scams. Though they do not back cryptocurrency, it's still a good idea to report exit scams to the SEC so that they can alert the proper authorities.
You also may want to file a complaint with whatever crypto forums you use, so that any accounts that were tied to the exit scam can be flagged.
Realize that you probably won't see the money you invested ever again.
There's a good reason why crypto is considered to be one of the riskiest investments you can make. The chances of being scammed out of money are very high, and there really aren't any legal boards that can oversee cryptocurrency to speak of.
Because of the loose regulation, chances are that you should grieve. If you've fallen for an exit scam, the probability of you getting that money back is very low.
Take a look at the signs you should have picked up on.
The good part about being scammed is that you can use the experience as a real-life lesson. If you learn something from it, then the loss you experience wasn't for nothing.
Look back at the entire ordeal. Were there warning signs that something wasn't right? Did the offer and guarantee seem too good to be true? Were the CEOs people you never heard of before?
Take time to read up on warning signs of an ICO scam, and compare what you read with the scam you feel you fell for. This little measure can help protect you from other scams later on.
Pull out of any other ICO investments that raise a red flag.
A little prevention may be in order if you've fallen for an exit scam in recent years. Now that you learned how to spot an exit scam the hard way, it's a good idea to take a look at the other investments you made.
Now is the time to cash in (or at least halt) any ICO investments that seem fishy. The adage "once bitten, twice shy" will suit you well here.
If you are struggling to cope, consider talking to someone.
A lot of people who fell for an exit scam do not feel okay with it. In fact, there have been some cases in which people have killed themselves over having lost every last penny they owned to the biggest exit scams in history. It's okay to be upset! Being scammed is a big deal.
Bad as it is to be scammed, you can't let grief make you go off the deep end. If you feel like you may hurt yourself, please call a help line and book an appointment with a therapist.
Finally, you might also want to rethink ICOs.
Cryptocurrency is already an extremely risky investment, but ICOs take it to the next level. If you've fallen for an exit scam, you already know this all too well.
You've suffered a serious loss. It stung. It showed you the reality of trading an unsupervised asset in an unregulated world. Do you want to deal with it again? It's up to you, but it's definitely something to think about.