How to Spot Cryptocurrency and Initial Coin Offering (ICO) Scams


How to Spot Cryptocurrency and Initial Coin Offering (ICO) Scams

 The cryptocurrency market is bubbling with energy with new coins debuting almost every month. There were roughly 8,711 cryptocurrencies in the $2.61 trillion crypto market as of December 3. But the euphoria is also making it increasingly difficult to keep a check on the authenticity of crypto tokens, and investors often fall for scams.



Each month, dozens of new cryptocurrencies are released, and these new tokens and coins are accompanied by a series of initial coin offers (ICOs) (ICOs). Despite the fact that cryptocurrencies were pummeled in 2018, the interest among a broad pool of investors for these options has grown. Scammers are attracted by all of these causes. After all, if investors are prepared to put their money into a highly speculative cryptocurrency, they appear to be equally willing to put their money into fraudulent tokens or ICOs.

The Squid Game token is one such example. The coin, launched following the immense popularity of a Netflix show of the same name turned out to be a scam. The Squid Game token both zoomed and crashed in the span of a few days of launch as the developers absconded with tokens worth millions of dollars.

The prospect can be frightening for a cryptocurrency investor wanting to take advantage of a plethora of fresh investment options while staying protected from fraudulent ICOs and dubious coins and tokens. Even experienced investors may struggle to keep up with the language as blockchain and cryptocurrency technology develops at a rapid rate. While there's no guarantee that any cryptocurrency or blockchain-related firm will be legitimate or successful, following the procedures mentioned below can help you be as certain as possible that you're not being duped.

Crypto scams or crypto fraud vary from pump and dump schemes to scam Initial Coin Offerings (ICOs). 


Other types of crypto scams include:


  • Market manipulation 
  • Ponzi schemes
  • Phishing
  •  Fake websites

Red flags to look out for with crypto projects 

There are some tell-tale signs that newbies to the crypto space should look out for. These are not the only things to be mindful of. 

  1. Websites with spelling mistakes and little information 
  2. No social media pages or very new pages
  3. New Reddit accounts promoting the project
  4. Few Google search results other than from the project itself 
  5. Scam website detectors pull up little or no information as the project is so new
  6. If the project is called a scam by numerous people across different platforms 

How To Identify a Scam Crypto Project.

Meet the Members of the Team

The developers and administrative team behind any ICO or cryptocurrency project are perhaps the single most essential success element. Major players dominate the cryptocurrency space, with superstar developers like Ethereum inventor Vitalik Buterin capable of launching or breaking new projects merely by being named on a development team. As a result, scammers are increasingly inventing bogus founders and histories for their projects.

Be wary of impostors

 It is well known that investors value the advice of well-known figures. Swindlers frequently construct bogus videos featuring well-known people in order to deceive investors. In such circumstances, digging further is frequently beneficial. Investors should follow information back to its source to ensure its accuracy.

Examine the Whitepaper

The whitepaper for a cryptocurrency or initial coin offering (ICO) is the project's core document. Any blockchain-related project's whitepaper should include the project's background, aims, strategy, issues, and implementation timetable. Whitepapers can be extremely revealing: a glitzy website can disclose that a company lacks a fundamentally sound concept. A company with a website full of spelling problems, on the other hand, may have a whitepaper with a sound concept and a well-thought-out implementation plan.

The first step toward analyzing a whitepaper is to read it very thoroughly. Check to see if the whitepaper has complimentary resources as well, including financial models, legal concerns, SWOT analysis, and a roadmap for implementation.

The fear of missing out (FOMO) factor in crypto markets is a trap for unsuspecting investors who invest in these speculative currencies without doing their homework. They are left with useless coins and no recourse in the judicial system.

Red flags, on the other hand, can alert investors to potential scams. The most important part, like with any investment, is thorough study and reliance on only credible sources of information.

Avoid companies that do not provide whitepapers at all costs. Even so, a fraudulent corporation might present a plausible whitepaper, as was the case with PlexCoin, which managed to raise over $15 million before being shut down by the US Securities and Exchange Commission (SEC). 1 A whitepaper should answer all of a possible investor's questions about what sets this enterprise unique from its competitors, how it plans to succeed, and the steps it will take to reach its objectives.


Take a look at the Token Sale.

To assist the crowdfunding process, any ICO will rely on a token or currency system. Legitimate businesses and enterprises make the mechanism and the token sale's progress transparent to potential investors. As the ICO progresses, keep an eye on the token sale figures. Better yet, keep an eye on the token sale over time to observe how it develops. It's a significant red flag if a corporation makes it impossible for anyone to track the progress of their ICO. Some fraudulent ICOs hide their token sale progress behind the guise of individual contribution addresses, preventing potential investors from seeing how much money has been raised and how much time the sale has left.

Be wary of claims of high profits in a short period of time.

Every investor should keep in mind that any investment will appreciate in value over time. Furthermore, there are volatile cryptocurrencies with large price swings. Scammers take advantage of these characteristics and offer unbelievable returns in a short period of time. Fraudsters commonly employ phishing emails and social network handles to lure in unsuspecting first–time investors.

Keep an eye on the URLs

 The majority of fraud incidents involve untrustworthy websites. It is hazardous to visit a website if a 'lock icon' does not appear in the address bar next to it. Also, make sure the URL begins with 'https' rather than 'http,' as the latter is insecure. Because the difference between the letter 'O' and the number '0' is difficult to discern, phony site URLs may utilize the letter 'O' and the number '0' interchangeably. To avoid being cheated, you must be vigilant.

Websites like CoinMarketCap offer all the publicly available information needed to verify that a cryptocurrency is legitimate. Also, make it a point to check whether it is trading on the popular exchanges like WazirX, CoinDCX and CoinSwitch Kuber as they perform their due diligence as well. Taking a cautious approach could be time-consuming but is also lifesaving.

Another important identifier is a roadmap. Crypto projects with a clear, structured roadmap that ensures the project’s longevity and details the project’s success plan is important.

Sometimes, scam projects can get the best of even the finest news agencies. Scam projects can present as a really reliable crypto investment, only to disappear off the blockchain months down the line. 

Another big factor in identifying a scam crypto project is analyzing the websites that write about it. Some crypto news outlets are purely there to shill coins. Due diligence on these kinds of websites may not be taken very seriously.

How Feasible Is the Project?

While it may seem obvious, ICOs, and cryptocurrencies with the greatest chances for success are those that have the fundamental structure to outlast their competitors. Many launches, even highly-publicized ones, have sputtered after initial interest faded. Your best chance of a successful investment relies on a company having an achievable, feasible set of aims. The company should have a compelling concept for the time being, but it also must be able to carry that concept over into execution over the short and long terms alike.


To spot a phony cryptocurrency project, do your homework.

Research is key to identify a scam crypto project 

Research is essential for both novice and seasoned investors who want to avoid losing money. Within the crypto sector, scam initiatives are unavoidable, but they may be avoided. A lack of openness and a new digital footprint are red flags to look out for. Pay attention to your gut instincts as well.


A whitepaper can reveal a lot about a project's future success, as well as whether the developers are serious about attracting investors.

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