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Four Tips To Identify a SCAM ICO

As the crypto industry is slowly heading towards mass adoption through high volatility and many other challenges, the emergence of projects undergoing ICO (Initial Coin Offering) and STO (Security Token Offering) are gaining a wider exposure and interest.

What is an ICO?

An initial coin offering (ICO) or initial currency offering is a type of crowdfunding using cryptocurrencies. An ICO can be a source of capital for startup companies. Any individual or a company can fund any project or become an investor.

What is a SCAM?

The term SCAM is used to describe a quick-profit scheme, where a person cheats another individual or group out of money by presenting them with false information during a deal or offer. In the online world, the most common scams were conducted over e-mail, SMS and sometimes even phone calls. Just as every popular industry has its Scammers, the Crypto world is no exception.

How To Identify ICO SCAMS

These days, a crypto investor has to become a true detective in order to conclude whether a project that is currently undergoing ICO is legit or fake. It is extremely difficult to spot SCAMS in the online world, and sometimes we can risk accusing legit projects based on our paranoia. However, there are a few Red Flags that we can look up.

1. Fake Team

Even though it is easy to create a fake identity online, some ICOs use stock photos from Wikipedia or other sources to enhance their team. Past ICOs (such as Benebit) faked their entire team with fake names and photos. A helpful resource is provided by third parties websites, such as ICOBench, where they require a few team members to pass the KYC.

2. Poor quality or plagiarized WhitePaper

The WhitePaper is the core of an ICO. It provides a deeper insight into the project and it helps investors understand how will their money be used by the team in order to successfully implement their product on the market. However, there are cases where WhitePapers have poor grammar, are badly written or even plagiarized. Another Red Flag is when the whitepaper lacks information, research and references.

3. Illogical token distribution structure

It is important to take a look into the financial aspects of the ICO. In their Token Distribution structure, you can understand how the funds will be used for implementation of the project. In the case of a SCAM ICO, you can see random percentages being written there that don’t quite make sense.

4. No timeline for product launch in their RoadMap

The RoadMap is an important aspect because it provides useful information about the development of the project during and after the end of the ICO. The team must provide detailed insights about how they are planning to use the money they have managed to raise and when are they estimating to deliver a working product to the market. However, if this information is somehow missing, this is a serious Red Flag.  


Many startups managed to raise the funds they needed for their projects by undergoing ICO. However, because this industry is still young, there are many loopholes that enabled the emergence of SCAMS. Because of this, the credibility of the crypto industry was negatively affected, making it harder for legit projects to obtain the funding they need. Only by working together, we can build a modern, safe, secure, fast and transparent future by using the amazing cutting edge Blockchain technology!

04 Dec 2018 scamicoscam icotips and tricksadvice
The views and opinions expressed in blogs are those of the authors and are not the official policy or position of ICObench. Any content provided by our bloggers or experts is of their opinion and they are fully responsible for it. ICObench is not legally responsible for the blog's content.

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13 Apr 2019 Miruna-Maura Barbulescu 2 0 2483
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