How to identify an ICO scam?

As someone who has been in the online business for many years, you are probably already familiar with how many scams and fraudulent sites the Internet aims to steal your identity, personal information, and ultimately money. An ICO scam is undoubtedly one of the most common lately.

Whether you have been in this business for many years or are just starting your career in the crypto industry, you know how many scam sites are present and that it is best to avoid them. However, learning to recognize scam sites such as ICO scams, for example, is not always the most straightforward task.

Since recognizing the ICO scam is a question, you must know what the ICO means. Let’s start with the fundamentals, shall we?

What is an ICO – Get all the fundamentals

ICO is an acronym for the Initial Coin Offering or Initial Currency Offering. It’s a sort of funding using cryptocurrencies, often a part of crowdfunding – the online venture or event by raising relatively small amounts of money from a significant number of people.

In an Initial Coin Offering, a quantity of cryptocurrency is sold from coins (tokens) to investors or speculators in exchange for what happens to be a legal tender or other cryptos such as Ether or Bitcoin. When it comes to the tokens, it’s interesting to note that they’re promoted as currency’s future functional units if the project successfully launches and the ICO’s funding goal is met.

ICO, in the crypto world, is equivalent to an IPO. However, a significant difference between the two is that an IPO is usually for well-settled companies. On the other hand, ICO is for the young and risky, in general.

What kind of source can Initial Coin Offering be?

An Initial Coin Offering can be a source of capital for numerous startup companies. They may allow startups to avoid numerous regulations that limit them from seeking direct investments from the public and banks, venture capitalists, and stock exchanges.

Depending on the nature of the project, Initial Coin Offerings may fall outside existing regulations and be banned in some jurisdictions such as South Korea or China. Since there’s a lack of enforcement of securities law and regulations, Initial Coin Offerings have been an excellent tool for fraud. ICO scam is something that users may often encounter online. We’ll discuss this matter later in this article.

Less than half of the total Initial Coin Offerings survive four months after the offering itself. In 2018, half of the ICOs sold failed by the beginning of 2018. However, a record $7 billion was raised via Initial Coin Offering during the first half of 2018 despite their history of falling cryptos prices.

Is ICO a scam or not?

Still, some people are wondering – is ICO a scam or not? Is it truly a good idea to invest in it or not? In its regulated and original form, ICO is not a scam. Even though there are many fraudulent ICO sites, legitimate ones are 100% safe to use and invest your money.

However, make sure you’ve done your research and are convinced that you’re not dealing with another ICO scam that could be highly harmful. Cons are to be avoided at any cost, so you should do proper research before choosing where you will invest your money.

But what about a genuine ICO scam? What is it precisely, and how can you identify it?

What is an ICO Scam, and how to identify it?

As you might have guessed, ICO scam sites are simply flourishing, which means there are a lot of them. They pose a severe threat to all users interested in them and who want to preserve their integrity on the Internet, which is often a real challenge.

Therefore, it is imperative to understand that ICO scam sites are ubiquitous these days and the number one priority for you is to know how to recognize them and avoid them. So, how can you identify an ICO scam site?

Even though there isn’t a universal answer, we will help you uncover all the “red flags” and signs that you might be investing in a bad ICO.

What are the most common signs of an ICO scam website?

• A Crypto team with no experience – This means many no-well crypto advisers are present on that site.
• Aggressive marketing – Too many ads and banners across social media and Google promising huge profits that are “too good to be true.”
• No real need for the token – In case you’re able to replace the token with BTC or ETH, and it still works, it means that there’s no real need for the permit, hence no need for the ICO.
• Bonuses are available for everyone – Remember: “The more funds are raised with a bonus – the more probably the price will be traded close to that discount level.”
• Low-quality community discussion – It is clear that a strong community creates high-value conversations. If it is lacking, it may be a sign that something’s wrong and that it is an ICO scam you’re dealing with.
• An already huge market cap – Remember, if there’s no infinite number of tokens, only an intelligent percentage will be distributed to the public. There’s no lock up on the tokens reserved for the team.
• The public sale lasts an eternity – It can be either the demand is too low or the cap is too high. However, it’s always a better idea for a project to raise 100% of 10M than 50% of 30M.
• There are no signs of a significant exchange looking to list the ICO’s token – However, it’s not to be said clearly since the legal term isn’t allowing ICO teams to speak about exchanges.

The best way to spot ICO scams?

There are some significant and inevitable questions that you should ask yourself in order to spot a fraudulent or scam ICO website:

#1 Do you understand the project?

Signs of a fraudulent ICO site are that a project’s whitepaper conveys little information on the project’s primary purpose. It is probably a scam if you’re getting more and more confused by reading it.

#2 Who is the team behind the project

It is more common to be scammed by non-existing people (that you didn’t even know existed) than by famous crypto developers and entrepreneurs. Make sure that you know who stands behind the project.

#3 Does the project need a blockchain?

The project’s whitepaper needs to lay out why it needs a blockchain. Ideally, your preferred projects should be genuinely disruptive in nature.

#4 Are the founders engaging with the community?

Ensure that you can contact the founders directly via popular social channels such as Telegram. Professional and severe founders who are passionate about their reputable projects will keep the information flow going.

#5 Will the project potentially provide real value?

Remember, people buy things or services that have a particular value. Make sure that specific project is of any significant worth.

Get to know the well known ICO scams that you should avoid.

We want to introduce you to the most common ICO scam types that you need to consider. These scams steal people’s identities, use Ponzi schemes, are phishing sites, have fake ICO teams or illegal/plagiarised whitepapers, steal content from another project, ask for private keys and other information, etc.

Here is an ICO scam list you should be aware of:

• Redux ico scam
• Squid game ico scam
• Ico-ton scam
• Fusion ico scam
• Faceter ico scam
• Ico phone scam
• Less-chain.com

Essential things to know about these scam sites

These scam sites above are primarily startups and projects that you should pay special attention to to avoid as much as possible. They are considered the most prominent ICO scams currently found on the Internet harming their users.

CEOs’ of these companies are collecting millions of dollars worth in cryptocurrencies. Their only goal is to make enormous profits with their scam ideas. Therefore, you should be very careful with them. However, the list is long, and we have tried to single out some of the essential ICO scam sites that you must avoid.

Conclusion

ICO scam sites are straightforward to spot when you read all these essential things to pay attention to. If you are seriously thinking about being successful in this industry, you’d need to be very cautious.

Do not click anywhere. Always double-check each ICO site, white paper, user community, and comments on relevant crypto forums, make sure to know who the owners are, what sort of ICO team stands behind a project of your interest, and much more!

Remember, prevention is always the best possible solution to protect yourself adequately from scammers. Even though fraudulent ICO projects somehow look like the real and legitimate ones, if you follow these professional tips, we assure you that you will be able to spot them very quickly!

We wish you good luck with that!