How to identify a scam ICO?

HowToToken Team Staff asked 7 months ago
1 Answers
HowToToken Team Staff answered 7 months ago

Sam Town, an autor of cryptoslate.com, lists 7 factors that better be in your stop-list while choosing whom of ICOers to give your money.

• Poor online presence
A factor that is quite easy to check. Go to LinkedIns of founders, have a look at Telegram and Slack channels. No activity by founders at all? Bad sign.

• Guaranteed profits
No one can guarantee you any cash-related things in the world of crypto. If a project (like Bitconnect) guarantees payout with high dividends in a very short period (month or two) it is likely to be a Ponzi scheme rather than serious financial organization

• Solutionism
Does the project need their own specific cryptocurrency to cover their needs? You need to ask yourself, however, whether using blockchain-based loyalty programs to launch a galaxy-spanning space empire is really a feasible application of blockchain technology.

• Empty Github repositories
“By providing links to their code repositories, ICOs allow individuals with programming knowledge to audit their development process and determine whether the proposed solution is valid or not. Checking that the underlying technology that drives a blockchain solution is well-organized and functional is critical when assessing initial coin offerings.”

• No white paper, bad white paper or plagiarized white paper
As white paper is a core document of any ICO, it cannot be really short or written in unreadable technical language. Each term that is not well known by widely public should be carefully explained. If there is no WP but the process of gathering money is on, it is undoubtedly a scam.

• Shady premines
Actually it is normal that parts of the team get tokens for their work and might have some advantages in getting them. What is not normal is disproportionally large premining when a lot of tokens (movements of which might affect the price) go in wallets of founders and developers. This is a signal that supports the idea of avoidance of the project.

• No Roadmap or unrealistic Roadmaps
If a project wants to launch a global wifi network within 6 months, it is a scam. Do not forget that all ICOs have to follow strict rules of countries they operate in and that there are also scientific limitations to some ideas (like wide aerospace tourism). Try to avoid projects that do not list concrete steps they are going to make to achieve concrete goals from their White Paper.

https://cryptoslate.com/seven-key-signs-ico-scam/