Five Important Signs that an ICO Is a Scam

The prospect of investing in an initial coin offering (ICO) can be quite alluring. There is something rather exotic and tempting in this type of crowdfunding, whose relative unfamiliarity and technical complexity can invoke excitement and frenzy. But the fact that something might be mysteriously complicated and full of sophisticated wording doesn’t mean that it’s necessarily legitimate.

ICO is a great way to harness the power of the crypto-community in order to raise some capital, and indeed many innovative companies and startups are using ICO to push their inventive plans further ahead. Yet, there is also a different kind of usage for ICOs, a much darker one: scams.

As a legitimate startup company, all of these ICO scams hurt us; they damage the overall reputation of ICOs and discourage potential investors. We therefore thought that it would be a good idea to help the crypto-community identify and recognize ICO scams before they might run away with your money.

Here are a few signs that may indicate that a certain ICO is a scam:

No team / fake team – for obvious reasons, scammers are not too thrilled about exposing themselves; they therefore either don’t reveal who their team members are, or either they showcase fake team members. It is thus vital to examine if the ICO does have actual members behind it with real identities and qualifications.

Confusing and vague whitepaper – by nature, whitepapers can be quite technically cryptic as they frequently contain intricate terminology and explanations. Yet, there’s always supposed to be a clear guiding principle or a mission statement through which investors can understand what the ICO is all about. Whitepaper without any evident clarification about the project and that leave the investor even more baffled than before reading it is a definite red flag.

No product/demo/prototype – don’t expect to find a final product when examining an ICO; after all, the purpose of the ICO itself is to gather resources in order to develop the final product. However, you do need to find something: a demo, a prototype, or perhaps even just a really impressive demonstration of sorts. Lacking to offer any semblance of a product whatsoever sure is a bad sign.

Negative reviews on the social media – while an ICO scam can control what’s happening on its own online properties, it is difficult to erase scathing comments and reviews on the social media. Researching an ICO on the social media should be a fundamental part of the investor’s due diligence.

Unfounded claims and unrealistic goals – “Join us and become rich!” “Our coin will become more popular than Bitcoin!” and similar claims can be easily refuted and just by their grandiose promises investors should be alert. There just aren’t any earning guarantees that someone could claim with 100% certainty, and when such one is stated, be very careful!

Of course, there may be more signs that an ICO is a scam; but these five signs should be on the top of your “To Check” list. The crypto-world holds many exciting opportunities, yet it unfortunately also incorporates more than a few rotten apples. Do your due diligence and only invest in companies that you’re certain that they are legitimate.