How to Identify ICO Scams?

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If you are a bounty hunter, then you are living in the absolute best possible time. There are so many benefits to bounty hunting but you need to be aware of ICO scams.  We are living in the era of the ICOs and they are not going away anytime soon. In fact, here is a stat that is going to make you lick your lips. The amount of money ICOs have raised in the first quarter of 2018 alone is more than the entirety of 2017.

How to Identify ICO Scams?

How to Identify ICO Scams?

The total funds that ICOs have raised in the first quarter of 2018 are 118% more than what they have raised in 2017!! A 118% spike in 1/4th the amount of time!

And there’s even more good news. With multiple smart contract platforms like EOS and Cardano coming up, the number of ICOs is surely going to increase exponentially. What this means is that you are going to bounty offers from everywhere. However, this where you must draw the line.

Your time and resources are limited, which is why you should know how to judge the credibility of an ICO beforehand. The reason why you do that is that, no matter how much we try to defend the space and no matter how revolutionary ICOs may be, there are a lot of scams out there.

The Floyd Mayweather ICO Scam

The Centra Coin ICO came into limelight because of a number of reasons. Firstly, they had celebrities like Floyd Mayweather and DJ Khaled endorsing their ICO.

How to Identify ICO Scams?

Secondly, they were promising to deliver a cryptocurrency debit card backed by Visa and Mastercard that could be used at stores just like a credit card.

The Securities and Exchange Commission reigned down hard on the two co-founders of the project, Sam Sharma and Robert Farkas. The SEC said that Centra had no relationship with Visa and Mastercard, saying that they “sold investors on the promise of new digital technologies by using a sophisticated marketing campaign to spin a web of lies about their supposed partnerships with legitimate businesses”

However, Centra had already raised $32 million in their ICO. They serve as a perfect example of the various ICO scams that are out there. In this guide, we are going to show you how to identify these scams. We are hoping that this will help you in your bounty career.

#1 The Team

It really goes without saying that the success of a project is directly related to the credibility of the team. Let’s put it like this, if you are investing your money into a company, wouldn’t you want to know that the company is in good hands and that your money is going to be appreciated considerably?

Let’s look at one of the most successful projects of all time, OmiseGO. Not only do they have an incredible team, they also count people like Vitalik Buterin and Lightning Network Creator Joseph Poon among their advisors as well. So it is no wonder that they had no trouble getting their funds and their investors are now enjoying a healthy return as well.

Now, compare that to this garbage.

How to Identify ICO Scams?

Image Credit: Reddit

Take a good look at that photo of this “Incredible team”.

Yes…your eyes are not deceiving you, that’s Ryan Gosling’s photo on the team page.

Obviously, most of the time it won’t be this obvious to know whether the team is actually garbage or not. In cases like that, you should adopt a more hands-on approach. First, search for the names of the team members on Google. Most of the time they should have a LinkedIn profile. Do a quick search and learn more about the team members. Ask yourself the following questions:


  • Have they been involved in any successful ICO venture before?


  • Have they been involved in a well-reputed company (Google, Deloitte, etc.)?


  • Have they been recommended or endorsed by well-known people?


It doesn’t matter if you come across as stalkerish. You must put in this work to avoid ICO scams so that you don’t end up wasting your time and resources later.

Secondly, you should search for the images of the team members on Google. The reasons for this, is again, twofold.


  • Firstly, you want to make sure that you are not getting “catfished”. Meaning, they are not putting up photos of random celebrities or stock photos on their team site.


  • Secondly, the person may be using the same photo on different websites and projects. So it will give you a good idea of whether the person actually exists or not and, if they do, what the are involved with.


#2 Pyramid Scheme Resemblance

According to Wikipedia, “A pyramid scheme (commonly known as pyramid scams) is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products or services. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.”

How to Identify ICO Scams?

An ICO that promises “guaranteed returns” on their investment is a scam. Any crypto investor worth their salt will tell you that will tell you that there are no guarantees in the crypto world. One of the most infamous examples of this is Bitconnect. Let’s take a look at their website and promises.

How to Identify ICO Scams?

If you see anything like that in a website, then don’t bother taking any of their bounties. Simple as that.

You don’t want to end up with tokens like these:

How to Identify ICO Scams?

#3 White Paper Quality

A white paper is the bread and butter of any and all ICOs. According to Wikipedia. “A white paper is an authoritative report or guide that informs readers concisely about a complex issue and presents the issuing body’s philosophy on the matter. It is meant to help readers understand an issue, solve a problem, or make a decision.”

In simpler terms, a white paper can tell potential investors everything they need to know about the project. This is the reason why an ICO which doesn’t have a whitepaper should simply be looked over.

Another thing that most ICOs realise is that majority investors simply won’t bother to read through the whitepaper. This is the reason why they simply outsource their whitepapers to cheap freelance writers who end up creating proper works of art. “Art” is being used extremely liberally here of course. Checkout this gem of a whitepaper by “Arbitrage Crypto Trader”.

Here is an extract from the whitepaper:

“However, the arbitration did not die definitively. He again in favor, thanks to the appearance of crypto currency. All of us see that right now quotations bitkoyna on different stock exchanges differ from each other by 1-5%. And for some of the Altocums, the difference can sometimes be as high as 50%.”


Its ok, don’t bother making sense of it.

A well-crafted whitepaper can define a generation. Just look at what Bitcoin’s whitepaper has done to this era. An ICO which doesn’t bother putting in any effort shouldn’t be given any attention.

#4 Inactive GitHub Repository

An active GitHub repository is a good indicator to show how seriously development has been going on in the project. Let us show you a good example of an active GitHub repository:

How to Identify ICO Scams?

1,014 commits. That shows that developers are definitely giving their all to the project.

Now, compare that with Savedroid, which pulled off a stupid marketing stunt and ended up alienating all their investors.

How to Identify ICO Scams?

Yup…not good.

#5 Pointless Tokens

For most of your bounties, you will probably be paid in the native tokens, instead of BTC, ETH, or Fiat currency. If that’s the case, then you must make sure that you are dealing with tokens which are going to appreciate considerably with value.

So, how do you make sure that you are getting good quality tokens?

You inspect the project and ask yourself the following questions:


  • Does this project need to be on the blockchain?


  • Does this project need to have tokens?


If the answer for any of those happens to be “No”, then those projects don’t need a token and those projects are doing an ICO simply to raise money. Now, why shouldn’t you take useless tokens with little to no utility?

For that, we need to understand the concept of token velocity. Token velocity is an indication of how much people respect the value of that particular token. If people hold on to a token, then it has low velocity. However, if people quickly sell that token for BTC, ETH, or Fiat then that token has high velocity.

If you were to define Token Velocity in strictly mathematical terms, then it would look like this:

Token Velocity = Total Transactional Volume / Average Network Value.

If we were to flip the formula then:

Average Network Value = Total Transactional Volume / Token Velocity.

Now, that leads to two conclusions:

  • More the token velocity, less the average network value.


  • More the transactional volume, more the token velocity.

This is the reason why you should work for a project whose tokens actually have some utility and gives their users a reason to hold on to them.


These 5 rules should be more than enough to help you identify ICO scams. There is a reason why you need to do this. According to this article by Bloomberg, of the 30 biggest ICOs in 2017, the ones without an actual working product to back their projects did the best in their first month of trading.

That’s a shocking statistic.

Happy bounty hunting!

But make sure that you are allocating your resources to projects that deserve you!


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