12 signs of scam ICO project

Scam ICO Projects often promise huge profit in a short period of time, with poor technically preparation, references and abandon the community.

Initial Coin Offering is a form of raising capital by selling cryptocurrency (Coin/Token) to maintain and develop the project

Beside successful project such as Bancor (BNT) called for 153 Million USD in 3 hours, Basic Attention Token (BAT) attract 35 Million in 30 seconds… there are also some multi-level project work based on Ponzi shape, it means “Taking money from latter user to pay to the first come”. When the number of new investors decreases until the time when there is no more funding, the development team will hug money and “run high away”.

Many analysts think that ICO have changed the picture of the financial world in the past 3 years. In March 2020, 2,329 ICO projects on cryptocurrencies were launched, according to Statista. However, 99% of past ICO projects have failed, not to mention a few opportunists who built fake Dapps and Coin / Token to create “ICO bubbles”.

About development team

The first thing that need to do before investing in an ICO is explore the development team, including co-founder, technical staff and project ideas. Because of working in Technology field, each member usually has a Linkedin profile that provide some personal information.

Investopedia recommend that investor must put their trust in development team which has Blockchain experts in the relevant field. Typical, the development team often have Blockchain experts who has knowledge on business and how to run a company. Besides, the Linkedin shows that they support the ICO project you interested in. If the member never like any details of the project as a suspicious point.

First impression

A good ICO project is always complete in designing, structure and grammatical error. The reason is every professional team wants to get good points in the potential investor mind. You can research white paper, request more information via Telegram, check fanpage in social network and E-newspaper.

White paper

White paper.

Although the white paper has different writing styles and structures, the common point is to clearly present the project roadmap. However, some white papers currently lack analysis, market forecasts or technology descriptions. Most of the failed projects miss the aspect of building a business model, which is very important when project owners want to borrow from banks. Hackermoon commented, the white book error proves that the founder lacks business experience and long-term analytical capabilities.

Community and channel

Every successful ICO project needs the community’s interest in the development roadmap, including investors and market research experts. You need to flip through the project’s media channels to see the time of creating social media accounts, the number of interactive members and the content of the conversation. For example, check how many posts, comments and likes your Twitter has. You also need to pay attention because the ICO project with 35,000 Telegram members can contain 29,000 fake accounts. However, the poorly developed team will often respond slowly, even abandoning the support request of investors.

Rate program code and test product

For technically savvy investors, considering the program code is a way of evaluating an ICO project. Of course, some development teams intentionally conceal code to prevent intellectual property theft. However, many projects still share the code publicly on the Github repository, allowing the community to contribute. If you find a critical flaw in your code, consider carefully before investing.

Another noteworthy factor is community feedback on the test product. A fully featured minimum test product is definitely appealing to investors to participate in the official release.

Potential finance

ICOs are a popular model of start-ups. During project implementation, the development team may face difficulties and should have working capital for contingency. Small but potential companies often attract the attention of large corporations. Having such a giant behind, the project development team is able to access of need.

Founder income

If the founder’s income relies solely on the project, the proceeds after the ICO can be used for improper purposes. In addition to the founder, you should check if other core members have a stable income or not.

Escrow

Next, you should check if the development team uses the escrow service. The reason is that the disbursement delay causes the development team to change the expected schedule in the white paper. According to Hackermoon, the escrow development team must specify a mechanism for returning funds to investors in case the project is delayed for a long time.

Security Token or Utility Token

The US Securities and Exchange Commission (SEC) estimates that most of the tokens that have been released in the past few years are of the Security Token category. However, most of the development team advertises them as Utility Token to avoid restrictions on investment laws. You should stay away from the Utility Token that does not come with any utility in the ecosystem because the project inevitably has some issues with the authorities after the ICO. On the other hand, if the Token is listed on the market as a Security Token, be sure to meet the legal requirements.

The US Securities and Exchange Commission (SEC) estimates that most of the tokens that have been released in the past few years are of the Security Token category. However, most of the development team advertises them as Utility Token to avoid restrictions on investment laws. You should stay away from the Utility Token that does not come with any utility in the ecosystem because the project inevitably has some issues with the authorities after the ICO. On the other hand, if the Token is listed on the market as a Security Token, be sure to meet the legal requirements.

Adviser team

The advisory team plays an important role in the ICO project. They are often experienced blockchain experts who support various projects and serve as a bridge between development teams. In the early stages of starting a business, alliances with other companies are an advantage for startups, demonstrate operations and increase reputation before investors.

If you see the adviser of the development team as CEO of a successful company or expert of a large exchange, then this is a sign that the ICO project is trustworthy.

Density appears on Internet

When every aspect of the project is ready, the development team will announce the ICO plan. You can search for projects on the Internet, through the development team blog, websites and newspapers. The more information appeared, the better the project was promoted and approached more investors. In addition, you should look for the keyword “phishing” with the project name and the development team to test the reaction from the community.

High profit

The bigger the profit, the higher the risk.

Smart investors understand that capital contribution to an ICO project is potentially risky, especially when the development team claims to be the next X company, and commits many times higher interest rates to banks in a short period time.

In fact, most financial investment projects on the Internet are considered High Yield Investment Programs. Analysts commented that the higher the interest rate of an ICO project, the shorter the duration. For example, projects with an interest rate of over 10% per day usually live for 1 to 7 days. You should also not invest in projects with websites that do not use SSL security protocols (URLs starting with http instead of https) or having inconsistent content between items due to copying from other projects.

Conclusion

Caution is necessary to help investors avoid fraudulent ICO projects. Besides the aforementioned signs, you can check through the vision of the development team, the frequency of editing the program code on Github, the technical information in the white paper, the level of activity on social networks…

GES Global project that releases GES Token on the Ethereum platform always have a clear development roadmap, transparent budget spending plan, and support for transactions in the vast ecosystem. GES Group’s operating team has many years of experience managing games, blockchain and many other industries so you can be assured of profits and utilities. The group also fully complied with the regulations and began to complete the relevant license in the countries of operation.

GES Group plans to conduct a Pre-sales round next month, and will list GES Token on Top 10 international exchanges such as CoinMarketCap, MXC, Poloniex… in the third quarter of 2020. In the same year, GES Group will launch GES Wallet, Gexchange.io and eSport ecosystem to promote the company’s game.