ICO Scams

Each month, dozens of new cryptocurrencies are released, and these new tokens and coins are accompanied by a series of initial coin offers (ICOs). Even though cryptocurrencies were hammered in 2018, the desire among a broad pool of investors for these options has increased. Scammers are attracted by all of these causes. After all, if investors are ready to put their money into a highly speculative cryptocurrency, they appear to be equally eager to put their money into fraudulent tokens or ICOs.

ICO scams

Categories of ICO Scams

Exit Scam

Exit scams are a type of fraud perpetrated by unscrupulous cryptocurrency marketers who gather cash for an ICO and then vanish without providing investors with any information. Exit scams were claimed to have stolen more than $100 million in cash given to ICOs in 2018.

Bounty Scams

When it comes to bounties, they’ve even made their way into the cryptocurrency industry, with the notion being used in a number of ICO projects. Another form of ICO fraud is the bounty scam. In this case, the ICO fails to pay out promoters who were promised monetary incentives for their public relations efforts.

Ponzi Scheme

In a Ponzi scheme, organizers entice new investors by offering to invest cash in high-yielding investments with little or no risk. Organizers of this scam offer huge profits at a later time in order to entice additional participants. As a result, rather than participating in any legitimate investment activity, the deceptive actors concentrate on recruiting new money in order to fulfill promised payments to earlier investors and to use some of the invested funds for personal gain.

URL Scams

Another popular method involves creating fake websites that match ICOs and instructing users to deposit coins into a compromised wallet. Naive investors who are unaware of authentic websites are sometimes fooled due to such fake websites and lose their ICOs.

How to Prevent ICO Scams

Cryptocurrency Fraud or Violations That May Qualify for an Award By The SEC:

  • Unregistered ICOs
  • False and Misleading Statements

Examine the Whitepaper

The whitepaper for a cryptocurrency or initial coin offering (ICO) is the project’s fundamental document. Any blockchain-related project’s whitepaper should include the project’s background, aims, strategy, issues, and implementation schedule. Whitepapers may be quite revealing: a fancy website might indicate that a company lacks a fundamentally good concept. A firm with a website full of spelling problems, on the other hand, may have a whitepaper with a strong concept and a well-thought-out execution strategy.

Get to Know the Team

The developers and administrative staff behind any ICO or cryptocurrency project are maybe the single most crucial success element. Major players dominate the cryptocurrency sector, with superstar engineers like Ethereum creator Vitalik Buterin capable of establishing or breaking new projects just by being included on a development team. As a result, fraudsters are increasingly inventing phony founders and histories for their enterprises.

Take a Look at the Token Sale

To simplify the crowdfunding process, each ICO will rely on a token or currency system. Legitimate businesses and initiatives make the system and the token sale’s progress transparent to potential investors. As the ICO progresses, keep an eye on the token sale numbers. Better better, keep an eye on the token sale over time to observe how it develops. It’s a huge red flag if a firm makes it impossible for anybody to track the development of their ICO.

History of ICO Scams


Enigma will refund ICO investors who lost $500000 to scammers.


Onecoin is currently believed to be the largest crypto fraud of all time, thanks to the BBC’s Missing Cryptoqueen audio series. It’s thought that the Onecoin fraud — now revealed to be a massive Ponzi scheme – was perpetrated.


Another of the most egregious and well-known crypto-scams of all time. Bitconnect defrauded investors out of an estimated $4 billion in a multi-level marketing-driven Ponzi scheme, enticing them in with boasts of an unbeatable trading algorithm that, obviously, never existed.

If you need help navigating the intricate world of cryptocurrency investments or have concerns about potential fraud, reach out to Kelly+Partners Accountants Burbank. Our committed team is ready to offer the expertise and assistance necessary to protect your financial well-being.