Presales are common in the cryptocurrency industry. It is a way for a new project to make itself known and also to raise funds in order to be able to finance itself and thus have a chance to be able to develop fully.
Unfortunately, presales also involve a lot of risks because, on the one hand, it is almost impossible to define in advance how the market will react and if this new project will take off or if its price will collapse once listed on the exchange platforms.
On the other hand, it is a perfect playground for scammers of all kinds to see a simple and effective method to steal money from investors.
Lately, the Shopayment case illustrates the subject very well. It is a pre-sale having ended at the beginning of October and which had everything of a potential success until it turned into a tragedy. What happened? This is what we will try to understand immediately!
The Shopayment project
On paper Shopayment ($SPAY) looks like an excellent project or at least with an idea that could go a long way. Nevertheless, if you have a little knowledge of the world of entrepreneurship, you will know that an idea is anything but sufficient to allow a project to materialize.
Thus, the Shopayment whitepaper indicates that the goal is to build an e-commerce platform capable of enabling payments in cryptocurrency. As a bonus, the project could adapt to other platforms such as eBay or Amazon.
Suffice it to say that when you read this, it is extremely attractive: a way to pay in cryptos on online stores allowing more transparency with fast transactions. For many in the cryptocurrency industry, this is a logical development to come.
Therefore, Shopayment seemed designated as the project to take this step and therefore attract many users. Therefore, as an individual interested in pre-sales, it is definitely the kind of enticing pre-sale that makes you want to invest.
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The presale itself lasted a few months with an initial price of $0.001 then various phases bringing the value of $SPAY to 0.0024 $. Nothing special about it, the majority of pre-sales work this way now: those who invest the fastest take the most risk, but also can increase their profits more potentially.
It’s due to marketing pur et dur that the majority of presales carry out in order to tempt investors and also indirectly reward those who believe in the project from the start.
Where are the red flags?
Before deciding to invest in a pre-sale, you have to look les red flags which can cast doubt on the veracity of the project. In the case of Shopayment, there was some questionable elements, but nothing in the first place suggested a scam.
The project even received a audit of the Solidproof part which is generally a guarantee of minimum quality, but was also present on Coinsniper (even promoted as one of the projects of the moment). Nevertheless, there was no no team KYC. Which means that although there were the photos of the team on their website, no possibility to prove that they were the right people behind this presale.
Another slightly shady point, but not enough to doubt, is social networks. More and more pre-sales artificially inflate their subscriber numbers on their networks using bots. As a result, we have the impression that there are already a lot of people who are interested in the project when there is nothing.
Although this practice is limited, it is done almost for all projects now to the point that it can no longer be an argument to define the legitimacy or otherwise of a presale.
End of presale: the beginning of trouble
The end of the presale for Shopayment took place at the beginning of October with two announcements. The first project would be available on Bitmart exchange which is headquartered in Singapore, it is a medium-sized CEX. The second news was the distribution of $SPAY tokens to all investors.
Although it may be strange that a presale does not start by being listed on a DeFi platform like PancakeSwap, this is nothing abnormal. Thus, Bitmart received the exclusivity of being the first to be able to make this cryptocurrency available to trade.
It was from this moment that things started to take a disturbing turn, not to say extremely bad. On the one hand, Coinsniper removed Shopayment from its site stating that the profiles of the individuals were fake (they were simple photos found on Google) and therefore there was no way of knowing who was behind the Shopayment team.
As an added bonus, token distribution started to take days when it is technically a quick step of the case from a few hours to a day max. balance sheet, the listing on Bitmart has lagged.
The icing on the cake, the project team started to be quieter, even going so far as to restrict communications for several days on their Telegram group.
Listing sur Bitmart
It was finally Monday, October 24, 2022 at 10 a.m. UTC that Shopayment was available on Bitmart. While the price announced by the team was to be strangely $0.005 against $0.0024 at the end of the presale, it is with the end of presale price that the token was finally accessible on Bitmart, and this after several attempts to list it already the week before.
— Shopayment (@shopayment) October 24, 2022
Investors had quite a few confidence issues following a limited and disastrous communication, but the listed price not being as advertised added a final blow to this dubious project.
In addition, the project team took the opportunity to finally unblock the Telegram group in order to communicate very little about the situation. without even really explaining. As a bonus, this is the only place where they communicated.
Result, the price of $SPAY has instantly dropped from $0.0024 to $0.0005. This has prevented the majority of investors from selling and of course very few users want to buy such a project. The lack of liquidity and the management of the listing in addition to the lack of confidence led to this result.
After various adventures, it is today October 26 during the day that $SPAY has been delisted from Bitmart at a price of $0.0001 without any information. The CEO, having given no sign of life on the group for two days, has just left a few vague messages in recent hours and without any proof indicating that there would be a buy back.
And buy back generally occurs when the price at the end of a presale falls and in order to consolidate the project and the value of the token, the developers buy back the tokens at a reduced price to raise the value and thus build investor confidence.
So in the last few hours $SPAY token disappeared from Bitmart without any information from them. The CEO and the project team cannot be found and post almost no or so a message every two days on Telegram without really informing about the situation.
Everything seems to suggest a scam at this level even the worst of projects could not also be badly managed. The mystery remains all the same why such a token was able to find itself available on a centralized exchange platform. Also, the Coinsniper team seems to have warned Bitmart about Shopayment.
On their Telegram group we can read that they now define Shopayment as a scam by responding to a user concerned about the project.
Obviously, the pre-sales environment involves many risks. Maybe in the future there will be strict regulations on the nature of these projects and the smooth running of a presale, but in the meantime, you have to be vigilant and above all invest only what you are ready to lose .
Regarding Shopayment, scam or very poorly managed project, The result is the same. There is no chance that the value of the token will rise again or that investors will be able to recover from their losses. The lack of communication and the broken promises have definitely shaken the confidence of those who believed in this project. It is very likely that we will not know more than it is on the side of Shopayment or even Bitmart.
If, despite everything, you are still interested in presales, there is currently that of Dash 2 Trade which has had great success with over $2.5 million raised in one week.