Practice Test Geeks(CCE) Certified Cryptocurrency Expert Practice Test
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Initial Coin Offerings (ICOs) Flashcards

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  1. What is an 'ICO exit scam' (also known as a 'rug pull' in its ICO form)?

    Answer: When an ICO project's founders abandon the project and disappear with investor funds after raising money

    An exit scam occurs when ICO founders collect investor funds and then deliberately abandon the project, taking the raised capital with them.

  2. What does 'lock-up period' refer to in the context of ICO tokens distributed to early investors?

    Answer: A restriction preventing early investors from selling their tokens on exchanges for a defined period after listing

    Lock-up periods prevent early investors from immediately selling their discounted tokens upon exchange listing, protecting market price from sudden large sell-offs.

  3. Which of the following best describes 'pump and dump' manipulation in ICO markets?

    Answer: Artificially inflating a token's price through coordinated buying and false promotion, then selling before the price crashes

    Pump and dump schemes involve coordinated groups artificially inflating token prices through hype, then mass-selling to profit at the expense of other investors.

  4. What is the role of a 'smart contract audit' before an ICO launches?

    Answer: A security review by independent experts to identify vulnerabilities in the ICO's smart contract code

    Smart contract audits are security assessments by specialized firms that examine code for bugs, vulnerabilities, and exploits before investor funds are committed.

  5. What distinguishes an IEO (Initial Exchange Offering) from a traditional ICO?

    Answer: In an IEO, a cryptocurrency exchange conducts the token sale on behalf of the project, providing vetting and instant liquidity

    IEOs are conducted through an exchange's launchpad platform, which vets projects and provides immediate trading after the sale, unlike self-managed ICOs.

  6. What is 'whale manipulation' in ICO investing contexts?

    Answer: When large token holders use their significant positions to artificially influence a token's market price

    Whales are holders of very large token quantities who can move markets by placing or canceling large buy/sell orders to manipulate price in their favor.

  7. Under the Howey Test applied to ICOs, which element is most commonly argued to be absent when projects claim their token is a utility, not a security?

    Answer: An expectation of profits

    Projects often argue their tokens provide immediate utility rather than creating an expectation of profit, trying to negate the third prong of the Howey Test.