How to Identify ICO and Cryptocurrency Scams

Despite being a bad year for cryptocurrencies, 2018 witnessed a rise in the number of new cryptocurrencies. 
Lots of investors are looking to recoup their losses by banking on new prospective coins while first-timers in the world of crypto want to have a fair share of their own experience. This has led to the rise of fraudulent coin offerings as scammers are moving in for the kill.
The rapid development of the crypto and blockchain technology have also led to increased confusion as even most veteran crypto-investors find it challenging to keep up with new changes. This is why it is getting increasingly difficult for investors to see through these new cryptocurrencies and identify fraudulent ICOs.
In this informative piece, you will learn How to identify ICO and Cryptocurrency Scams. Although no one can guarantee the success of any cryptocurrency, the following tips will help ensure you do not invest in fraudulent businesses.

“black laptop computer” by Jonathan Chng on Unsplash

Study the Team behind the Cryptocurrency
The success of any coin offering or cryptocurrency largely depends on the administrative team and developers behind the project. One method used by scammers to deceive prospective investors is by carefully inventing non-existent founders and creating a biography for them on the internet.
Some fraudulent projects go to the extent of enlisting the names of top crypto-developers on their project to deceive gullible investors.
You can sniff out these fraudulent companies by carrying out thorough research on members of the team behind any crypto-project before making any investment. You can check their social media handles and LinkedIn profile to verify if they indeed exist.
 Some scammers will go overboard to create fake profiles for non-existent developers. So you should check their followers and make sure they are genuinely active with the right amount of followers. You can also check the profiles of top crypto-developers associated with any blockchain project to see if they confirm such claims themselves.
Also, it is important you do a background check on the qualifications of the developers behind a project before you make any investment. Check if the founders of the project have the right experience for their project. This will help you avoid fraudulent crypto-projects.

Study the Whitepaper
Aside from the founders, another essential component of a crypto-project is its whitepaper. Information such as the background, strategy, project timeline, and implementation. Goals and challenges must be x-rayed in the Whitepaper.
The Whitepaper reveals all you need to know about a crypto-project. Thus a fraudulent project may lack the fundamental precepts that should be present in its Whitepaper.
The second step in identifying a crypto-scam is studying the Whitepaper for every project. When reading through the Whitepaper of a crypto-project, you should check the following information:
- Financial models
- Project strategy
- Project goals
- Legal backing
- Implementation strategies
- Available resources
Avoid any company that fails to present a Whitepaper for its crypto-project.
You should note that a fraudulent project can still have a solid Whitepaper to kill off every suspicion by prospective investors. An excellent example of such a scam is Plexcoin. PlexCoin made over $15 million with their solid project roadmap despite being a fraudulent venture before they were shut down by the U.S Securities and Exchange Commission in December 2017.
 A Whitepaper should provide an elaborate explanation of a particular crypto-project and be able to convince a prospective investor on why the project will be successful. If you come across a Whitepaper that still leaves you with severe doubts about the project, then you should watch out for fraud.

Check Out the Feasibility of the Project
The success of any ICO project lies in its fundamental structures and plans to outlive other competitors. Your basis of selecting a potential ICO project should depend on its concept, goals and implementation strategy for the long-run.
Most projects do have promising concepts with high publicity but lack the right blueprint to see these concepts to reality. They fade out after a couple of months, going down with millions of investor’s money.
Your choice of ICO investment should not only have a convincing concept, but the right plans to actualize them and retain its relevance. 
Another factor that begs for absolute attention is the transparency of an ICO company. A legitimate ICO project will always give real-time updates on its activities to keep investors informed with an accurate progress report. The company will always publish a detailed progress report on their official website or social media outlets.
Fraudulent ICOs will always keep investors in the dark or leave them begging for more details. Watch out for such companies and stay away from them.

Check Out the Views of Other Investors
Another way to sniff out an ICO scam is by checking out what other investors and non-investors have to say about the currency. The views of investors and other crypto-experts about a project most times turn out to be true.
Stay away from projects with negative projections from investors. If the crypto-community does not accept a project, it is likely to fail. You can do this by following the community backing such a project. If the project has little or no investor community, it is probably a scam.
Be sure to verify the communities behind every project.
Every genuine ICO project should have an active community that strongly supports the project.

Watch Out For Projects with Unrealistic Goals
This is the easiest way to recognize a fraudulent crypto-project. Most projects with bold claims about their goals usually end up failing. Projects that lack potential are always quick to claim that they do have potential, thereby diverting your attention from their model or concept.
If a project comes out with unrealistic goals to solve a problem that’s beyond their model, then you should watch such a project closely or avoid it entirely.

Watch Out For Fake ICO Advisors Like Scammer-Advisors from ICObench
The birth of so many new projects that do not fully understand the requirements for an ICO led to the rise of so many fraudulent ICO advisors that don’t know their subject.
Watch out for these types of Advisors and never let them mislead you into investing in the wrong project.
Beware of false ratings and misleading information you will find on ICOBench. The site is notorious for inflating the ratings of ICOs without carrying out proper research to verify their authenticity.
They have severally failed to sniff out ICO scams and even endorsed a few fraudulent projects (the case of Veio is a clear example). ICOBench is also involved in lots of payment- for-rating scandals, so it’s best you take whatever information you get there with a grain of salt.

Final words
Although lots of investors had previously hit the jackpot with their crypto-investments, it is not advisable to treat cryptocurrencies as a get-rich-quick scheme. New projects with promising prospects arise every day; if you are too greedy, you could fall for a scam, ignoring the grey areas and making a huge mistake.
So if you are on a lookout for a new project, you should make sure to go over every little detail before you invest. Always verify the legitimacy of any new project through trustworthy sources and treat any unanswered question seriously.
You can go online and ask questions or air your doubts about the concept or model behind the project. Finally, you should always follow your investments and keep up the latest developments in the crypto-space.
If you do your homework and make sound investment decisions, you would likely escape being a victim of fraudulent crypto-projects.
The world of cryptocurrency offers lots of opportunities for investors, but you need to be careful enough to avoid frauds, scams or businesses with weak prospects.