Inspired by the ‘pump and dump’ scams we got to know in Hollywood blockbuster The Wolf of Wall Street, ICO scams have evolved to plague the cryptocurrency market. An ICO or Initial Coin Offering is a fundraising process where those looking to finance new projects sell crypto tokens in exchange for Bitcoin or Ethereum. Think the cryptocurrency version of Kickstarter. Whilst many legitimate start-ups use ICOs for the development of new projects, cybercriminals are using the same mechanism to raise funds through scam projects, initiatives that will never see the light of day and will simply take your Bitcoin or Ethereum for no good reason at all.

ICOs have the potential to raise millions in seconds – Ethereum holds the titles for the largest ICO to date raising over $18 million in early 2014. This fact however hasn’t gone unnoticed by cybercriminals and other fraudsters. ICO scams are becoming increasingly common, which makes knowing how to spot one essential to protecting your investments online. As a leading supplier of IT support, we keep up to date with the latest cyber security threats and scams so you don’t have to. Here our experts reveal how to spot an ICO scam so you can invest your hard earned cryptocurrency in all the right places.

No or limited online presence

Just like any Kickstarter campaign, an ICO should provide all potential investors with a detailed breakdown of a project’s purpose, associated aims and the team behind it. ICOs should list all the individuals involved in bringing the would-be project to fruition, from its founders and developers to its advisors, security experts and pretty much anyone else with any form of participation.

The net is a wonderful thing, it gives you unlimited resources to track down all you need to know about an individual, even if you just have their name to hand. If the individuals listed on the ICO have no or poor online presence, then it may be a scam. Many scammers will go to great lengths to create and backup their fictitious team, so scrutinise online profiles carefully.

Unrealistic returns

As with traditional crowdfunding campaigns, many ICOs offer incentives for people to invest but remember if it sounds too good to be true then it probably is! ICOs that guarantee profits are big (big) scams. Look for campaigns that have more realistic returns and no promises.

No goods to back up the ICO

For developers looking to raise funds for the creation of a new application, it’s not uncommon for them to share their code via a repository link like GitHub to provide evidence to back up their project claims. Potential investors should be able to assess this code, and if it’s not provided it is very likely that this ICO is a scam.

For ICOs not focused on the development of a new app, genuine ICOs will provide some form of detailed evidence to reveal the technicalities behind their business model. White papers are commonplace with ICOs. Scam ICOs however tend not to provide white papers as evidence, or even worse, share badly written or blatantly plagiarised documents to fool investors.

Need further information on how to spot an ICO scam? Contact our team today for the latest IT advice and support.

A specialist IT Company based in Corby, Northamptonshire, Syntec Systems provide expert IT Solutions and IT Support services to businesses in the local area. Syntec Systems specialise in IT Management, IT Consultancy and IT Procurement, and their experienced technicians also offer a 24/7 helpdesk service to help resolve untimely IT Issues for all businesses with no prior contract.