10 Ways to check if an ICO is a Scam

  1. Google the name of the ICO and ‘scam’ – if there are any doubts about the ICO, they will usually show up by people posting about it on Reddit, Bitcointalk, Steem, or elsewhere, and these posts will be picked up by Google. Some ICOs are literally just set up as scams intended to raise the money in the ICO and then close down. Several scam ICOs have at least 1 member of the team who already has an association with a scam crypto project. If anyone from the team has any such negative association, then avoid that ICO. Search ‘name of person + fraud’ and ‘name of person + scam’ in Google and anything bad will usually show up.
  2. Check the Bitcointalk forum and see what experienced ‘hero members’ are saying- they tend to have been around crypto since early days and know what to look for. In general, if there is any question of an ICO being a scam, the issue will be raised on the ICO discussion page on this forum. You should be able to find the link by googling ‘ICO name’ + ‘Bitcointalk’
  3. Look at the photos of the team and advisors.If they look like they’re from stock photos that means they probably are. Some ICOs have literally made up names and used stock photos to make up their team. One recently even used a photo of actor Ryan Gosling as one of their team… The Google Chrome browser allows you to right click to google search for any image.
  4. Are the team or founder anonymous? If they are not willing to share their true, public, identity, then the project is most likely a scam. Satoshi Nakamoto managed to create Bitcoin whilst ingeniously hiding his identity. That is not the case for most ICOs today, where the reason for wanting to remain anonymous is more likely because they plan to pull an exit scam.
  5. Are the backgrounds and identities of the team or advisors made up? Research every member of their team. Do they have Linkedin profiles that mention the ICO? Is there any other information on the internet confirming that they are real people? Is there any way of knowing that their names aren’t completely made up? Several ICOs have claimed jobs, experiences and partnerships that had no truth to them, or have just hidden behind completely fake names.
  6. Are the advisors actually working with the project?Or have they just been paid to put their name or face to the ICO, but not to contribute their time or knowledge. Or are the ICO just using their names and photos without their knowledge or consent. This happens surprisingly frequently.
  7. Are the partnerships or customers advertised by the ICO real? More than one ICO have claimed partnerships with Visa cards or other well known companies, when these claims are total fabrications.
  8. Read the white paper and see if it’s legitimate – most are vague or unsubstantiated, and some are downright plagiarised. Are there a lot of buzzwords such as ‘AI’ or ‘blockchain’ or ‘VR’ thrown in to make the project sound more advanced than it is? Is the whitepaper unique, does the project add any value, or is the whitepaper just a collection of meaningless words? If a whitepaper sounds like it has been written by a freelancer on Fiverr, it probably has. It is easy for anyone to buy a whitepaper. To demonstrate, here are some of the offerings for ‘ICO whitepaper’ on Fiverr:
  9. Check the Github for the ICO. Even if you can’t read code, if the github repository for that project will give you a good indication if there is even some attempt at code there. You will be able to see if there are regular updates, or some more googling will show you other peoples’ comments about the code. If there is no code, or it isn’t being regularly updated, or added to, or there are negative comments, exercise caution.
  10. Not an ICO scam, but a warning: Check the bounties on ICOS – a lot of YouTube’s / bloggers on social media paid / given free coins for every tweet – so lots of social media may not be legit – check with the ICO and on their bounties page – this can be found by googling ‘ICO name + bounties’ if it isn’t evident on their website – if the ICO are incentivising people to tweet/ blog/ post videos etc. – then you can go on the assumption that they are being paid to promote the ICO and isn’t a reflection on the quality of the ICO.

11 Common ICO Scams

  1. Fake slack groups or telegram groups. Unofficial social media groups are often created, often looking very similar to the real ones. In the fake groups, bogus administrators try and scam you out of your Ethereum (or Bitcoin or other Altcoin) by giving fake ETH and BTC addresses. Never trust any contribution address posted on a slack or social media group, especially not one that is posted or given to you by an ‘admin’ or other poster, as the admin might be fake. Also, never give out your private key.
  2. Scam links and contribution addresses within legitimate Slack and social media groups. Even legitimate Slack and other crypto social media groups get spammed with scam when they are not properly managed – and scammers will post fake contribution addresses within the groups, or via private message. Again, do not trust any contribution addresses posted in Slack, Telegram or social media groups. Also, do not trust any messages or links from the Slackbot. Anyone can take over the slackbot to send out scam posts. This may not be the ICOs’ fault, but many people lose money by sending it to scam addresses for even legitimate ICOS
  3. There are also similar scam links posted, in Slack and other crypto social media forums, about MEW (MyEtherWallet) wallets. These scams take many forms, but their intention is to trick you into giving them your Private Key. NEVER give away or show your private key to anyone. As a general rule it is best not to trust any link or address posted in Slack or other crypto social media channels.
  4. Fake domains and websites created by scammers. These websites might be the same domain but with a different TLD- such as .org instead of .com, or may be a similar looking domain but with a misspelling, such as using ‘l’ instead of ‘i’ for example, so that it might be hard to see the difference. Always check the domain to the letter.
  5. If the ICO accepts payment by credit card. This isn’t necessarily a scam in every case, but is something to be wary of.
  6. Promises of guaranteed ROI – such as claims of paying 1% a day. If any ICO claims any such guaranteed returns, it is a scam.
  7. If an ICO uses lots of buzzwords- such as Blockchain, AI, VR etc.- but cannot explain what it is trying to do, or back up the technology and practicalities behind how it could work, then the ICO probably won’t work. Many whitepapers of scam ICOs are outsourced to freelancers
  8. Claims to be the next Bitcoin, or to revolutionise a major industry, without having serious partnerships and support behind it, then the ICO is optimistic at best, or a scam.
  9. If there is no code, the code is clearly copied, or there are clearly serious flaws in the code, then the project either has a lot of problems and is most likely not worth investing in, or is a scam. Check the Github, or google what other techy people think. If there are serious problems with the code, or no code at all, other people will be talking about it on Reddit, Bitcointalk or on Google, so you will be able to find out.
  10. Faking profiles of team members. Many ICOs have used fake people, fake names, stock photos, or even stolen photos, or photoshopped photos of famous crypto people, or celebrities. If photos or profiles look fake, they probably are.
  11. ICOs based on MLM – Multi Level Marketing – are usually scams.

Here are some examples of ICOs using fake or photoshopped photos:


Or Miroskii, which used a stock image of Ryan Gosling claiming to be one of their team…

How to minimise your risks when investing in ICOs:

Investing in ICOs is always risky. In addition to all of the risks of investing in crypto – the high volatility, the lack of regulation, problems with exchanges, security of storing cryptos and the potential for hacks – investing in ICOs is far riskier.

Some of the risks of investing in ICOs:

ICOs tie up your money for often unspecified periods of time until they are ready to hit exchanges. Many ICOs don’t even reach exchanges. There have been too many cases of ‘exit scams’ where the founders run away with the money raised straight after the ICO, causing investors to lose everything. Many just don’t work and just drop in value, for many reasons, such as poor planning, the developers leaving the project, or a team who don’t know what they’re doing. Many ICOs have just been run as ‘get rich quick schemes’ for the founders, and whilst their intentions may also involve getting the ICO traded on exchanges, so that investors can cash out, they just don’t follow through with the claims promised on their whitepapers.

Some legitimate ICOs will always drop in value, for various reasons- including competition, the market, regulation -and others will hit unexpected issues which means that investors don’t profit. However, there are a lot of things you can look out for to minimise your risks of getting caught by a scam ICO, and to help you see some of the problems with ICOs that will most likely lose you your money.

Here are some questions to ask yourself, and aspects of the ICO to research, before investing in any ICO broken into sections: about the ICO, their fundraising goals, the team and advisors, and about the actual coin or token itself.

Key questions to ask before investing in any ICO

Before investing in any ICO, you should be able to confidently answer all of these points, to reduce your risk of losing your money in a bad ICO investment. These questions will help you rule out the majority of ICOs straight away, with a little research.

1. Why are they launching this ICO? Is there any real-world purpose to it? Can you imagine this project having any value or use in 12 or 24 months time, or its token being actively traded on exchanges? There are hundreds of such ICOs, trying to raise funds to sell banana chips or make up products, or other uses for which they simply don’t need their own cryptocurrency launch. Some ICOs are too niche and localised to specific areas, but is it likely that a small project limited to a niche or a particular city will do well in the long term?

2. Does the ICO need its own cryptocurrency? Is there anything about this ICO, that would not be possible using fiat currency, or even an existing crypto such as Bitcoin? Is it realistic, that people would buy this crypto token, to use this product, or is it more likely that there are similar products or concepts already available that one can buy with fiat?

3. Does blockchain even benefit this ICO? Many ICOs advertise that they are using blockchain, and in some cases even creating their own blockchains, but where there is absolutely no benefit to them of using blockchain, and in some cases, the use of blockchain, especially with its current limitations such as storage capacity on the blockchain, might actually be detrimental to the product. I.e. is the use of words such as blockchain just hype, designed to promote the ICO rather than having any use.

4. Are the team real people with sufficient (or any) experience in crypto, blockchain and the industry they are operating in? Can it be confirmed, that the team are actually real people? Many ICOs hide behind anonymity, or even create fake profiles of fake people. One recent ICO used the actor Ryan Gosling as the photo for one of their fake team members! Do the team have provable profiles on social media, or Linkedin, or are they already known and respected in crypto or in their industry? If not, this should be cause for serious concern. If you are sure that the team are real people (and not fake profiles and made up names hiding behind stock photos), do they have the experience needed to make this project work? Many ICO teams have almost zero relevant experience, and are literally just individuals looking to get rich quick.

5. Are the advisors real people? Are the advisors shown on the whitepaper and website even aware that they are being used by this project as advisors? Many ICOs have put the names and faces of famous people in crypto to their websites- but without informing these people- they are just stealing their profiles and hoping they don’t find out! Have the advisors just been paid to put their names to the project, or are they actually invested in the project and motivated to make it work? Is the ICO paying celebrities to put their name to the ICO? Don’t be fooled by this- just because the ICO has good marketing does not mean that it’s a good project or that it will do well, or that the celebrities will benefit the project in any way other than helping to raise initial funds.

6. Do they already have any customers, or partnerships in place? I.e. if am ICO is proposing launching a credit card in partnership with Visa, does it actually have that partnership confirmed by Visa? Or are they just using the Visa logo? Or are they just giving their vague hope that they might one day be able to partner with Visa but have no plans or idea of how or when this might happen? If there is any doubt about any potential partnerships, it is best to exercise caution.

7. How much is the ICO looking to raise? Are they just being greedy or unrealistic? Could they make do with a lot less money? Have they already raised any funds? If institutional investors or funds have already invested in the project, it is more likely to have support and pressure to succeed. Have the team invested any of their own money (or time) already – i.e. do the team have a vested interest to see the project through? Are they being clear on how much they want to raise, and what they want the money for? Is there a clear roadmap of how they will develop the project and spend the money on? Do they need the money all upfront, or would they be able to make do with stage fundraising, so that investors don’t have to tie up their funds for so long? What is the ICO market cap of this project, relative to similar existing projects?

8. Why do they need to do an ICO to raise money? As opposed to raising funds by any other means or not raising funds at all. Do they even really need the money? Or is this just a made up concept designed purely to raise funds from an ICO? Would they not be able to raise funds from VCs or angel investors? Many ICOs exist purely because the founders know, that they would never be taken seriously by experienced investors, but know that because of the hype and lack of regulation around crypto, they might be able to raise money from some unexperienced individuals who fall for their pitch.

9. How long has the company been around? When was the website domain registered? Do the founders’ Linkedin profiles show how long the team have been dedicated to the project? Is there any proof that the team have been committed to this project for a while – i.e. such as raising VC funding, or the company having been in existence for a long time? Do they have a project or protocol that is already working, with customers and an active use case, or is it simply an idea on paper at this stage? Many ICOs are run by teams who just got together, only recently bought the domain and had a website built, have no or limited previous experience in the field, and most importantly, haven’t invested any of their time and money into creating a working project before going to ICO. Most ICOs are literally just ideas on paper. I.e. – if the project fails, they lose nothing, if it does well, they get rich, at the expense of their investors.

10. How long will the ICO be holding your investments for? Is there a clear roadmap? Does the ICO have any incentive to release the tokens on time, to get the project up and running, and to get the tokens tradable on exchanges so that investors can cash out or release their initial investments? Where will the funds and tokens be held until distribution – i.e. do they have safe storage? Many ICOs have been hacked and investors funds lost, and not all ICOs return these funds?

11. Does the ICO already have a product? If the ICO doesn’t already have a product, or at least a MVP (Minimum Viable Product) or a very clear roadmap, if they don’t have strong backing and pressure to keep working, chances are they might not have the motivation to keep working on the ICO after raising funds.

12. Is there any hope that the project or product in the ICO can actually work or have a real world use? A lot of ICOs use buzz words such as AI or VR or mention futuristic tech, or ideas that they want to implement on a blockchain. However, in reality, some of these concepts are simply not possible with the technology we have today, or even, don’t have enough of an interested user group to get enough customers to justify the money they are looking to raise. Some ICOs bring nothing new of value at all, and stand very little hope of succeeding. For example, Amazon, Ebay, Google and Facebook all have their issues and all are heavily centralised- however, they have a huge market hold, and it is unlikely that their dominance or market share will be changed any time soon, and especially not by a small or unknown ICO claiming to want to disrupt auctions or social media etc. And some ICOs really have nothing of interest or value to add.

13. Do you understand the field and market the ICO is about? For example, if an ICO is launched about the cruise industry supply chain, do you understand that industry inside out? Would you know if what they are saying is possible? Is there actually a market or use for this product or service? In many cases, it is easy to make an ICO sound good and pitch it as having a large potential market share, but unless it is an industry sector you are familiar with, it might be best to not invest, in case you are missing some fundamentals, or else to do an extensive amount of research, to see if the idea is plausible.

14. What are banks, hedge funds, and experienced investors doing? Note- just because a fund is investing heavily into a certain ICO, doesn’t mean that it’s good for you. Large and institutional investors generally get discounts or bonuses on their investments, and so might be paying a fraction of what you are for their shares or tokens. Or, institutional investors might be getting shares in the company, rather than the less valuable tokens that you might be getting.

15. How will the coins or tokens be used and distributed? I.e. if the founder or team get a large percentage of the tokens, is it possible that they could just dump them and run? If the devs and team are given a large percentage of the tokens, will they be released at once? This might risk their being dumped on exchanges, dropping the value.

16. What country is the ICO from? Is the ICO dependant or focused on any particular national market? Depending on the regulations of that country (and bearing in mind that crypto regulations can change at any time), this might have a huge impact on the outcome of the ICO. If the country the ICO is from suddenly bans crypto, or bans ICOs, or the economy there changes, the value of that ICO might suddenly decrease or crash. For example, Red Pulse is from China and is focused on the Chinese market – the value of Red Pulse dropped drastically on news of a China ICO & Crypto ban.

17. Would the ICO be classified as a Utility or Security? It is wise to keep abreast of SEC regulations.