Five Tips to Spot Fake ICOs and Cryptocurrency Scams

Yes, it’s true — over 80 percent of projects (by # share) were identified as scams in 2017.

Good news is that over 70 percent of ICO funding (by $ volume) to-date went to higher quality projects — so the fake ICOs and cryptocurrency scams are easily identifiable and aren’t getting the same amount of funding as legitimate projects.

So how can you spot a fake ICO and other cryptocurrency scams? There’s no guaranteed method, but below we’ve highlighted some of the top ways you can identify these scams and keep yourself safe.

Where’s the Whitepaper?

If a project hasn’t take the time to develop a white paper, it’s often because they don’t actually have a product. Even if they do have a whitepaper, make sure you take the time to read and evaluate the project and the team’s ability to execute it. Often times you’ll find that these companies are nothing more than half-baked ideas with holes in the product, business plan, or the roadmap.

Speaking of roadmaps…

What’s on the Roadmap?

When launching a token event, companies who are making strategic, thoughtful business decisions will publish their roadmap — usually directly on the website or within their whitepaper.

Beyond simply having a roadmap, make sure the milestones are possible and are already being achieved. For example, if a company says they plan to generate $1 million in revenue will have hundreds of thousands of users in just a few months — you should be very weary that this is an ICO scam.

Other things to look for on the roadmap is both goals that have already been met and how much runway is on the roadmap — i.e. are they showing you six months or eighteen months?

If they don’t have a roadmap…well, we’re not here to give investment advice but it’s probably not a good idea.

Are They Requiring KYC/AML Verification?

With the rise of regulations, every project should be running KYC/AML verification against their users to ensure security and the ability to withdraw their funds at a later point. KYC/AML Verification can be done via a launch platform, like WeStart, or can be done separately.

If the company is requiring KYC/AML but requires users to jump through hoops like providing personal addresses to them via unsecure methods, you should do your research and even ask to speak to project leads. If you’re putting your funds towards a project, you have the right to know how your information will be used.

If the host of the ICO or pre-sale doesn’t require identity verification through KYC/AML verification, they aren’t in compliance with federal and international regulations and it’s a high likelihood the project is a crypto scam.

Can You Find the Founders?

Gone are the days of Satoshi Nakamoto — meaning every project should have known and respected leaders.

Take the time to look the founders and team members up on LinkedIn — they should be able to easily be found and should have a background that shows they can actually build this project. Look at their LinkedIn recommendations and their activity — having these things is hard to fake and shows these are legit profiles and people.

There have been many a scam when it comes to showing founding teams, including the infamous Ryan Gosling photo that was used in the ICO scam Miroskii just a few months ago.

Sound Too Good to be True?

Like the old adage says, if it sounds too good to be true, it probably is. If any project is guaranteeing returns, exponential growth, or throwing around big names and logos, take the time to do all of your research prior to participating.

Stay Safe and Secure When Contributing to ICOs, Airdrops, Pre-sales, and Private Pools

There is no perfect technique for identifying fake ICOs and cryptocurrency scams and this list is by no means complete. However, these are some red flags that should help you make more informed decisions in projects you participate in.

You can ensure your safety and security with WeStart as every project hosted on WeStart undergoes our validation process and are required to have certain materials prior to launching on WeStart. Every team member of a project also undergoes our KYC/AML verification which adds an extra layer of protection for contributors and projects.

Browse top ICOs, airdrops, pre-sales on WeStart today.