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Scandalous ways ICOs scam you and counter measures

ICOs scam

Crypto space is filled with many intelligent ideas. Sadly, some of that intelligence is being used to scam people lately in a scandalous way.

We have compiled ways you could become a victim of an ICO scam. We will not stop there, will also provide you countermeasures to avoid being a victim yourself.

Using faces of people that never agreed to be on board

The Internet is a vast place.

How do you know if someone is using your pictures, credentials, and fame to dupe people?
It is very difficult unless someone warns you.

We personally faced this issue on Fiverr where someone was using an Australian journalist’s picture and credentials to sell services on Fiverr. When we reached out to the journalist to confirm the identity – our suspicions turned out to be true. The real author eventually lodged a complaint with Fiverr who promptly shut down the account. This freelance scam only effects those who directly contact the person.


ICOs are a different story. 

Hundreds and thousands of people get duped and it gives ammunition to the authorities to take complete control of this decentralization movement.

We have been noticing many cases where popular social figure names are used to create hype of an ICO and it was eventually realized that the person was not even aware of their name and image being used in raising money.

Counter measure: See if the pictures are identical to the individual’s social profile. If they are chances are it’s a scam. Generally, whenever an ICO manages to bring people on board – they take profile shots using their own merchandise (which is easy to photoshop as well) – however, it is always a good measure to see person’s personal social media feed to see if they disclosed anything about the project.

SEC approved, NOT

If you think people are the only victims of false claims – you are mistaken.  Even SEC is not spared. SECs name was used to lure investors under false pretense.  Recently SEC had to procure an emergency halt against Blockvest LLC. What Blockvest did is fill out an application with SEC stating that they ‘will not disclose how much they will raise’ and they ticked a box stating that they are not a security.

You can view the application here.

Essentially, anyone can fill this information – that doesn’t translate to ‘approval’.   It’s like sending in an application to Harvard and calling yourself a Harvard graduate.

Counter measure: Look for documents that prove the claims. Reach out to respective authorities in your country to confirm the authenticity of the claim.

We have partnered with everyone, even BMW, why not!

In a lawsuit against Titanium’s CEO, SEC listed all the fraudulent claims that the company made about being partnered with big brand name companies including Boeing, Accenture, and Paypal.

We fell for this scam ourselves.

Why not, Titanium boasted itself to be the first company to be BBB approved and even got verified by one of the top companies in the US.  To add to this, the list of companies and Michael’s personal profile was more than what Crypto space had seen earlier.

In another event, CarVertical claimed that it partnered with BMW. Later, BMW had to release a statement that they have not partnered with CarVertical.

Counter measure: When in doubt, tweet or message the companies with which these ICOs claim to have partnership or association.

Boasted Experience without a trail

In crypto space, the team is everything.

One person built Bitcoin that is now worth billions of dollars and may forever change how we transact in the future

Few folks built Ethereum that could revolutionize the way we enter into contracts.

So, yes, team’s experience and expertise is everything in this space.

This is precisely why lot of companies inflate their team’s experience or add fake profiles to create hype around their project.  Ultimately, they only need to raise quick buck and don’t need lot of people to fall for it.

Counter measure: Always look for LinkedIn profiles.  Check the age of social media.  Send a note to the ‘real’ person to see if they are ‘truly’ associated.


Selfies are a means too

In one of the tweets Changpeng Zhao of Binance had to warn people who were trying to use a selfie with him to promote an ICO.

This happened with Vitalik Buterin as well where people used selfies with him from his non-popular days to boast the direct association with Vitalik to raise funds.

Counter measure: This one is easy – tag the person in the same thread and ask ‘is this true?’. Most times people respond if the claims are an attempt to fraud.

Freebies, a tell tell sign of a scam!

How do you lure gullible ICO investors into investing as quickly as possible?

Set up a multi-level sale structure. Something like this:

First 1000 investors get 100% bonus
Next 1000 investors get 50% bonus
Everyone else gets 0% bonus
Did you see what I did there?

If I manage to create a decent website, add a few fake profiles, post some made up addresses – that will be enough to convince people to get duped without verifying because people will have their eyes on the freebies.

Even if the company only manages to raise money from first 1000 investors who fall for 100% bonus – that is a fantastic yield for a scam.

Scammers will just rinse and repeat, until we learn.

Counter measure: Generally, most genuine projects do not need to offer any bonuses.  Do your due diligence on the company and team.   When in doubt, wait for the ICO to end, see if they actually do something in the real world before deciding to invest.  Its better to pay premium after they prove their worth than to get duped entirely by falling for freebies!

No physical office? Stay away

It is easy to rent a temporary work space these days.  You can even customize it with your company name, logos.  It doesn’t cost much compared to entering into a long-term lease.

If your ICO claims to have an office space in prime location – it always pays to find out if it is true.

If the company entered into a lease – it generally conveys some confidence in the intent.  However, if they falsely claim a temporary office to be their headquarters or something alike – be wary.

If the ICO doesn’t have any physical location including a registered address – that is your queue to stay away.

Counter measure: Wherever possible, have someone check out the address.  Thanks to social media and fellow ‘potential’ investors on reddit, twitter, slack, telegram – this can be accomplished without having to travel to the ICO country

Other ways to scam

There are other ways investors could get scammed during ICOs, including:

  • Email hacks – email list of the ICO participants gets hacked and an invitation to participate in a limited time sale is sent out. Genuine projects generally do not change their timeline.

Countermeasure: Reach out to official twitter or email to confirm before investing

Website/Telegram/Slack channel hacks – website, telegram and/or slack channels could get compromised and a wallet address floats around for people to participate in ICO ahead of the crowd. Because this is floating in official channels – its easy to fall prey to this scam.

Countermeasure: reach out to the core team/administrators via other channels like twitter or facebook or email

Being aware if the first step to being safe. Investigate before investing.

Thank you for reading this article.

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IMPORTANT DISCLAIMER: Do your own research before investing. Crypto space is very volatile, don’t invest more than what you can afford to lose. Everything in this article is an opinion, not an advice of any kind.


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