How to Identify Scam ICOs?

Since the ICO craze of 2017, there have been too many Fake ICO projects and even more scam ICOs. So how do you identify scam ICOs?

We have looked into ICOs and IEOs, reviewing some of the top and worst projects since 2016. As a part of this quick guide, we aim to share our best practices on how to identify and avoid fake or scam ICOs. I hope that this guide will benefit you and hopefully, you won’t fa a victim to any scam.

The Look of the Website 

Fraudulent websites often depend on copying other website design or copy. You will find these companies stealing photos from variant resources and putting them on their website. Creating stunning websites can often be too costly, so why not fake it?! As a user, you need to just doublecheck the website and make sure that the content is right. The best way is often to visit the “About Us” section.

Team of Developers


Any successful ICO should have a good team of developers. Those should be mentioned on the website, and should be real people. What we mean by saying real people is, someone who has track records, active profiles on LinkedIn, GitHub, or the BitcoinTalk forum.

It is important to check those profiles, especially the LinkedIn one, where a history of employment should be listed and clarified.

Make sure that the project’s developers have GitHub profiles that include considerable contributions and/or repositories.

Proof of Whitepaper

A professional whitepaper is a must to any ICO. Make sure the ICO project has one that outlines the goals, in addition to the charts, roadmaps, simulations, specifications, encryption formulas, and other features connected with the nature of the project.

Innovating a token is definitely one of the basic points that should be mentioned in the list. This should come along with how that innovation would be achieved. If the website fails to give a clear picture, it is another red flag for fraud!

And remember, words are cheap. So look for an MVP at least!

The Project Goal

The project should make a logical claim regarding its goal or the roadmap. Read carefully how the aim of the project is presented to the community and try to estimate if it makes sense. With regard to the amount of money required for its soft and hard caps. Let me make it clear. Just ask yourself, does this roadmap make sense or it smells fishy?

Remember, if something sounds too good to be true, it probably is!

Code Availability and Transparency

The platform’s code on GitHub or Sourceforge should be open and within reach for examining. Sure, confidential party could be hidden, however, track records will tell you whether the ICO project is authentic or fake. The absence of such a condition raises a red flag.  Stay away!

Pre-sale Offering


ICOs and IEOs put a percentage of their coins or tokens on-sale prior to the actual launch of the project. This allows big investors to buy those coins or tokens at a discount. Usually, the purpose of such a step is to consolidate the credibility of the project by showing that big investors have made a footprint in the project already. While this sounds great keep one thing in mind. Pre-sale offering discounts should not be more than 10-15% otherwise those whales will eat you alive!

The Project’s Escrow Account

The guarantee in such projects to secure investors’ funds, is having an escrow account. While escrows could be done via smart contracts, projects could also use a multi-signature wallet. DAO approach could also be another way around it.

In the past, we have seen projects raise some $50 million and the project founder uses the funds for his benefits. Travel with private jets or by beachfront penthouses.

Declaration of Distribution of Coins

For supporting the credibility of the project, it is vitally important to declare how the coins or tokens will be distributed. Investors also have the right to know the exact percentage owned by the project’s team members, usually, the owners hold between 10% and 30%, besides that they are usually obliged not to sell their shares for around three years. This process is known as vesting.

These are some of the prominent points one can start with to avoid scam ICOs or any other scam startup.  You can also use the following verification steps to identify a reliable project to invest in.

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