How to Spot an ICO Scam

ICOs are an incredible way to raise money for companies to raise money. That promise of easy and quick money also makes them a magnet for scammers.

At ICOBriefing.com we look at dozens of ICOs every single day but pick less than 3% of them to review. These are some of the red flags that tell us an ICO isn’t worth looking at.

Profits over Premise

The ICO emphasizes the profits you’ll make from investing in it rather than the technology or business plan. This is a huge red flag that signals either a ponzi scheme or outright scam.

First of all, very few businesses can promise to turn a profit, especially when they are in a fundraising stage, so if they are promising to give you part of the profits they’re already probably lying to you. Second of all, if they’re emphasizing their profits over their business model, they’ve probably got a bad business model.

No Team Information

There are a few very niche situations where it’s possible the team may need to be obscured – for politically sensitive projects, or for privacy coin projects, but for 99.9999% of the projects out there, not having a team listed is a huge red flag.

No LinkedIn

Similar to the above, if you’re not showing the team information clearly – you’re hiding something. To us, it’s better to see a mediocre but decent team with transparent information than an “all-star” team with no Linkedin. The latter screams scam.

Weak Team

The team needs to have experience related to the project. No “Standup comedians” or “technology enthusiasts” or “rocket scientists” – yes these are real team member profiles we’ve seen recently.

The team should have worked in a field related to the project, or related to their role on the project for a few years. If you see someone’s position or role change completely for the project(i.e. From grocer at Walgreens to CEO of an ICO) – that is a red flag.

Mining Related

We’ve found in the crypto world that newbies are very attracted to the idea of mining – so one of the tactics scammers use is to label their scam as a “mining project”. Now not all cloud mining is a scam, but it’s just way too easy to create a ponzi scheme and call it a mining project. Unlike a Dapp, no working product needs to be seriously demonstrated, the team doesn’t need to be provably all-star, and the whitepaper doesn’t need to be elaborate.

Since it’s very difficult to check the legitimacy of a mining project, especially early on, scammers flock to this type of ICO, and you should run the hell away.