Top Tips to Identify and Avoid ICO and Cryptocurrency Scams

According to the latest report, a record $14 billion was scammed in cryptocurrency last year. Notably, the crypto-related losses rose by 79% compared to 2019, driven by the growth in crypto theft and scams. Interestingly, cryptocurrency scams were the most popular crypto crime in 2021, closely followed by crypto theft.

Considering how lucrative the cryptocurrency markets are, new users invest in crypto every day. It is evident from the fact that an array of new cryptocurrencies launch every month, and with them come initial coin offerings (ICOs). Investors have also shown the tendency to invest in highly speculative cryptocurrencies disregarding the cryptocurrency value. They also seem to be equally likely to invest in fraud ICOs as well.

For any cryptocurrency investor, it’s daunting to make the most of the new investment opportunities while staying safe from sketchy ICOs. Due diligence and using the right exchange platform to check cryptocurrency prices mitigate a lot of risks. However, cryptocurrency technology is evolving fast, and even seasoned traders find it hard to keep up at times.

There’s no guarantee that new crypto or blockchain-related start will be successful or legit. However, here are some steps to ensure that you don’t fall prey to a scam.

Research the New Crypto Project Team

A good ICO or cryptocurrency will always have reputed or skilled developers and an administrative team backing the project. The cryptocurrency space has several dominant names like Ethereum founder Vitalik Buterin. Such names can make or break any new project by simply associating with the development team. That’s why most scammers tend to invent fake founders and associations for their projects.

The best way to avoid a scam is to research all the key team members of the project before you make a sizable investment. Consider it a giant red flag if there are no social media profiles or a Linkedin page for a particular developer or founder. Even if they do have social media pages, check the authenticity of these pages. A social media page with millions of followers but next to no engagement might not be legit. Apart from this, find out if the educational qualifications of the development team add up. Does the experience claimed is real, and whether it is relevant to the project.

Go Through the Whitepapers Published by the Team


Every cryptocurrency or ICO team publishes a whitepaper outlining the strategy, goals, background, and timeline for implementing the blockchain-related project. These whitepapers have information that can be very revealing. Going through a whitepaper will tell you whether the project has a great concept and a carefully conceived implementation plan.

Sometimes projects with flashy websites might not have a sound plan, while projects with a below-average website have a great plan and strategy to follow through. Read the whitepaper carefully and see if there are complementary resources like a financial model, implementation roadmap, SWOT analysis, and more.

A whitepaper should be able to answer all of the investor’s concerns. That is what sets a particular project apart from its competitors. Avoid companies that don’t offer any whitepapers.

Track the Progress of the ICO

All ICO depend upon a token or currency system to crowdfund the project. A valid and legit company will make the whole system and token sale progress transparent for the potential investors to view. It’s best to keep track of the token sale figures as the ICO progresses and keep a tab on the token sale progress.

If any company makes it hard for investors to chart the ICO progress, it’s a major red flag for investors. Shady ICOs are more likely to hide their token sale progress under the garb of individual contribution addresses. It’s often done to invoice a sense of urgency in potential investors, even if there’s no evidence of a successful sale.

Check for Project Feasibility

The most important thing to check before investing is to check of the project’s feasibility. ICOs and cryptos with a good fundamental infrastructure to outlast their peers have a greater chance of success. For this reason, a potential investor should take a chance on a company that has a feasible set of goals and is also capable of executing them over time.

Moreover, be on the lookout for companies that keep things transparent for investors. Legitimate companies are the ones that strive to keep investors up to date with a progress report on their website or social media.

These are the best ways to avoid getting scammed by fraudulent ICO and cryptocurrency scams. It’s best to err towards caution when looking at new investment opportunities in the ICO or cryptocurrency markets. Remember, projects that sound too good to be true should always be avoided.


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