Crypto projects: what happens if the creator sells all the tokens and leaves?
Crypto projects that are just starting to enter the market often turn out to be a scam. The creator conducts a token sale and takes all the money for himself. How does deception happen and how to protect yourself?
New crypto projects are an opportunity to earn money by buying tokens on the presale. However, there are often cases when a newly launched crypto project is a scam (deception). And many users who have invested in the project token end up with nothing. What happens and how to act if the creator of the project takes all the funds and leaves the market.
Crypto projects: a classic scam scheme
This scheme is a classic deception in the crypto industry. A group of people create a fake project in order to obtain financial benefits. They prescribe the details of the functioning of the project, the token, what it can give. They forge licenses and write a beautiful story and a roadmap for the future. Usually such a project is heavily promoted in the crypto community.
After all these actions, the project stirs up interest and enters the ICO or IDO. In other words, it opens a pre-sale of tokens of its project with a certain starting price. People who are looking forward to buying at a cheap price from the presale, and then selling the token on the official listing on the exchanges for much more, run to buy tokens.
That’s just such projects are not going to move on. They collect the required amount and simply close the project.
What to do with tokens?
After such manipulation by the project director, people are left with a mountain of tokens. But no one needs all these tokens, since the project that supports them and for which they were created no longer exists.
As a result, the price of this token (if they managed to list on the exchange) literally flies to zero. And worth hundredths of a cent. This happens because the people who sold these tokens took all the liquidity for themselves. And the project tokens simply ceased to have any value in society. All at once, although they are sold, but there are simply no buyers.
Crypto projects: token price decline due to wrong strategy
In addition to the first option, there is the possibility that the project simply will not be of interest to anyone. This means that there will be no deception on the part of the creators. However, the price of the token on the exchange will still gradually go to zero.
This happens when the tokenomics and project system are thought out extremely poorly. The developers did not take into account many factors and adopted the wrong development strategy. As a result, users who bought the token very first immediately begin to “merge” it. Simply because they do not see the future in it. The price gradually begins to fall, a chain reaction occurs. However, the result is exactly the same as in the previous case.
How to protect yourself from deception?
n fact, there is only one advice: analyze well all the projects that you want to go into. No one is 100% safe from scam. Especially in cryptocurrencies. You need to be prepared that the project may fail and follow risk management. For example, do not buy one token with most of your funds.