Filip Poutintsev is an ICO expert and advisor, entrepreneur with 10 years of experience in online industry and marketing innovator. Filip points at 8 indicators of scam ICOs.
You can find out more about him and hit projects at ico-services.net
One must be pedantic when investing in ICOs. While there are not that many pure scams, there are even more crappy ICOs that will never get their product done or hit crypto exchange. One should be careful not to give his money to such projects. There are several indicators how to spot fraudulent or otherwise poor ICOs.
1. No Smart Contact
Yes. I have seen startups that call themselves an ICO, but have no smart contract. They are either poorly made scams or just terrible business people and you should avoid.
2. Anonymous project
If you want to scam people, best way to do it is by hiding your identity. Therefore you should never trust a project that does not display its team members, company information or physical address. No matter how good the project seems, there is a reason why they are hiding their identity.
3. Zero in raised funds
No raised funds is the clearest sign that an ICO is not going to make it. Don’t be the first (and only) idiot to invest in a bad ICO. Some ICOs try to hide it by displaying false information on their website, therefore always check at Etherscan, or ask for a proof of investments.
4. No public discussion channel
Be suspicious if there is no place to discuss the project openly. Sadly many ICOs have switched from Telegram groups into Telegram channels. If an ICO uses one-way communication platforms it usually means that they don’t want other people to see negative feedback that they receive.
5. Raising too much money
Honest ICOs will ask for the amount of money they actually need to develop their product. Usually it’s between $5M and $20M. But there are some ICOs that have their hard cap set at $100M or even higher. These ICOs obviously just want to raise as much money as possible, and it makes you wonder where that money will go.
6. Too complicated or incoherent plan
While it does not always mean that ICO is bad (maybe you just don’t understand it), usually it’s a sign that the team is not professional enough, or that they are just forcing blockchain in their business, when it really does not fit there.
7. Team members have no social media profiles
If no one, or only one member of the team has linked her social media profile it makes you wonder if those people are real.
8. Too homogeneous team
While this is not always a red flag, I’m usually skeptical if all team members are of the same decent (e.g. Chinese or Russian). While I understand that teams usually live in the same place and therefore have same nationality, they should at least hire advisors that are from a different country.In general, all recommendations may be summed up as follows:
- keep your eyes wide open,
- follow common sense,
- don’t believe sweet words,
- remember that fairy-tale promises are hard to keep,
- check all information about the project before investing.