How to spot a fake ICO easily

There have been many fake ICOs over the years. Running an ICO is easy money for scammers because it is so easy to fake it and people still fall for it as of this day.

It is becoming harder and harder to spot a fake ICO simply because scammers are getting better at it. The year 2018 just started with a another high profile ICO scam, Benebit ICO. The website benebit.io was taken down but the cache version can still be found in the web archive. All the things people look for in a legitimate ICO can be found in Benebit. It was so convincing that even reputable ICO review websites like icobench gave them a 4.1 out of 5 score, much higher than many legit ICOs. Benebit had a professional website, well written white paper translated into 3 languages, strong team with convincing linked profiles…etc. They could have ran off with more money until someone found the team pic stolen from http://www.thsboys.org.uk/school-information/staff/. Their hard cap is 22500 Ether (22.5 million USD during the ICO) and in the end, they ran off with 2.7 million worth of Ether. They could have scammed more if not for the accidental find and we should all take that as a heavy lesson moving on.

Benebit also had strong media presence with 9000+ telegram followers (much higher than many legitimate ICOs as well). They spend a lot of money on marketing and getting people to create good looking linkedin profiles. Looking at what they have done, they could have easily spend a few hundred thousand USD just on the ground work. Unlike other scam ICO, this one was a well orchestrated and funded ICO. If investors have been careful, they could see that none of their linkedin profiles had any recommendations from any verifiable person in the industry. The style of writing for all the profiles appear to be the same, ie very likely coming from the same person. However, not everyone go to that level of detail when checking on the team’s profile.

That bring us back to an important question. How then can we spot a fake ICO easily without spending so much time researching into them?

Here, I like to share my personal ICO checklist (sorted by descending order of importance):

  • An established company (highly regarded) with a product and a valid company address (not a virtual address). There are just too many ICOs and those that are answerable to the government and subjected to the country’s law have lesser chance of running away overnight.
  • Professional video with their team talking about the ICO including Youtube Interview with bloggers and influencers. This would be very hard to imitate using Fiverr. Alternatively, their ceo and core team would go to roadshows or exhibitions. Scammers wouldn’t dare to go live and reveal their faces in real.
  • If they are a startup, then the top management would make themselves available in social media and answer questions simply because they care! If they are real, they have nothing to hid and you should be able to verify their credentials easily even by talking to them. You should be skeptical if they are always hiding behind the scene and not contactable.
  • Over-emphasis on the rewards or things that sound too good to be true. For example, words like “200% pre-ico bonus” and “ROI in 3 months” should set off an alarm.
  • Be skeptical of ICOs that ask you to send crypto to a personal wallet addresses. As the crowdsale doesn’t use a Smart Contract, it means you have no visibility of the total funds raised at any time and guarantee they will send you the tokens after the ICO ends. It is unfortunate that I’ve seen more and more ICO launchers using this method and investors waiting a lot longer to get their tokens after the ICO ends. Ideally, investors only need to trust the Smart Contract and not the words.
  • Linkedin profiles of top management with recommendations from real verifiable people. You should be skeptical of their profiles if they could survive all these years without any recommendations from anyone.

“I don’t who you are, but if I know a friend who can proof you are good and actually exists, because I trust my friend, I trust you.”

Have a play at http://yetanotherico.com/ to see how easy to fake an ICO. Good luck with your next ICO investment.