What Is The Best Way To Spot An ICO Scam?
Anyone can tell you how to spot an ICO scam. In fact, there are dozens of articles around it. And everyone will tell you the same thing — look at the website, the whitepaper, and the product.
You can dive further into the pit by joining the Telegram groups, checking the token distribution structure, and engaging with the team members.
Even then, it is tough to spot a scammy ICO. Because everything can be faked.
One can design a pretty website for less than a $1000. And a whitepaper can be outsourced to a technical writer.
Marketers can be hired. Followers can be purchased.
And the media? It can be manipulated.
For example, when Prodeum executed its scam, they had a whitepaper, roadmap, a decent website, and A-team.
No one spotted the scam early except few — and these few have either been around crypto for a long time, or they simply did their research for extended hours.
Research Is The Key To Unlock ICO Scams
But the question is:
What should you research?
There are dozens of ICOs launching each and every day. With the number of hours we have, researching is a full-time job.
This is where selective research is important.
By selectively researching an ICO, you can quickly draw a conclusion. You can know if the ICO is worth your time or not. If it is a scam — or not. Should you invest — or not.
All it takes you, with selective research, is 10 minutes of your time. This is why your focus should be entirely on:
Analyzing The Most Critical Aspect Of An ICO
This critical aspect is not the product — or its appeal — or the use cases — or the social media following. All that comes later.
What is it then?
It is the team.
Because a good team decides the performance of the business. It decides the present and the future. More importantly, it is a clue for you — to invest or not to invest.
For example, look at what happened with Miroskii. They added Ryan Gosling as their team member:
Ryan Gosling is a popular Canadian actor. He isn’t a graphic designer, and isn’t associated with this ICO project. Not everyone knew though. The ICO is a clear scam that received hundreds and thousands of dollars during its presale and main sale.
It is better to avoid them.
(Though the company says their website was hacked)
That is why selectively researching about the team is the first step of the process. Once you know the team is legit, then it is a green signal to go ahead and cross-verify other factors.
So the question is:
How To Know If The Team Is Legit
Here are 4 tips to follow:
1. Question Everything That Sounds Fishy
For example, @Josephkunzler analyzed an ICO and discovered the person listed on the homepage has no Linked profile. It seemed fishy. So he researched further to discover the person doesn’t actually exist.
So if you feel something is off? And it doesn’t add up? Then stay away from the project.
2. Reverse Search Every Team Member’s Photo
Reverse image search is a process of finding the original source of any image. You copy the image URL from the ICO website, and then paste in any one of these tools:
This way you can discover if the person is actually who they claim to be. Ryan Gosling is a perfect example here. A quick reverse image search reveals his true identity.
3. Question & Match Their Credibility
As a detective, you pick the founders and analyze their claims. You analyze their reputation. Then you mentally take these details — and see if it matches across various channels like LinkedIn, Twitter, and Facebook.
Basically, you question their credibility. Fabian, an entrepreneur and investor, divides ICOs into good and bad. And he says:
A good ICO: The founders have been in the market for the underlying product for years, and they’re knowledgeable about crypto or have staffed their team with crypto experts. They have a great reputation, strong advisors and a mission. They want to change the world with technology.
A bad ICO: If there’s a celebrity promoting the ICO — run! If the advisors have little to no real experience with the product being made or they get too many tokens from the ICO, I’m not convinced. If the team has no prior touch points with the crypto world, avoid them.
With this, scam is now redefined. It isn’t about ripping you off financially — but also mentally. Stay away from such bad ICOs.
4. Drop A Message
Scammers can easily replicate celebrities profile, or get a professor or teacher as part of their ICO. And the worst part?
They don’t need anyone’s permission.
All they have to do is copy the image, use the exact name as advertised on their profile. Most people will be convinced.
This is why you leave a message.
For example, here is a tweet sent out by @Crypto_stakes on Twitter to double-check with Mike, who is the co-founder of Cindicator.
You can always message ICO advisors, or its partners to double-check their association with the project.
By analyzing the team members of an ICO, as an investor you are protecting your hard-earned money while also discovering a potential project.
There have been examples of cryptocurrency projects claiming big yet delivering nothing. All because of the team — that did not exist, or was incapable and inexperienced.
Just this little effort alone — of analyzing the team — is a step forward. It will help you save money, time, and find gems.