ICOs present cryptocurrency startups with a unique financial model that lets them crowd fund with minimal regulations and financial requirements. Investors benefit from the ICOs by purchasing the startup’s tokens and holding them until the time when they gain significant value. ICOs are supposed to provide a win-win situation, but it doesn’t always happen.

    The ICO industry is heavily unregulated. Starting an ICO is incredibly easy and anyone can do it. By writing a convincing Whitepaper, anyone can create a short campaign aimed at duping potential investors of their money. Scam ICOs are increasingly becoming a common trend. In fact, the top scam ICOs duped investors more than $400 million.

    The Worst ICO Scams of All Times:

    • OneCoin-$350 million

    OneCoin is the most infamous scam in the history of the ICO industry. Initially promoted as a startup that would promote the sale of educational materials, the company had a pyramid scheme that dictated how the materials would be sold. The company barely said anything about their tokens but they went ahead to promote the company. By the time OneCoin officials were arrested, they had duped investors more than $350 million.

    • PlexCoin-$15 million

    Four months after raising $15 million in an ICO, PlexCoin’s operations were halted by the US Securities and Exchange Commission (SEC), citing numerous signs of fraud. The company’s founder, Dominic Lacroix, was also arrested and all of his assets frozen. The company’s alleged mission was to make using cryptocurrencies accessible to everyone.

    • LoopX -$4.5 MILLION

    LoopX had barely gained popularity when they exited the ICO stage with $4.5 million worth of investors’ money. The company posed as a software startup with a unique program that could help cryptocurrency traders make more money.Few people were able to discover LoopX was a scam until the day they disappeared and deleted all of their social media accounts.

    • Benebit – $2-4 Million

    Like LoopX, Benebit advertised their project for several weeks and exited as soon as experts began raising red flags about them. The company had successfully forged details about their team members, including using a picture of a renowned French actress. Benebit also had a somewhat believable idea of tracking customers’ reward points.

    Key Signs of an ICO Scam

    Fake or Missing Information about ICO Team

    Of all the ICOs scams that succeeded, few of them had real details about their founders and team advisors. Benebit, for example, took random pictures and created fake LinkedIn profiles. LoopX did the same, and so did many others.

    If you identify a potential ICO worth investing, start by analyzing their team members. From the founder to the advisors, analyze each profile. The standard rule is that a legitimate ICO should have LinkedIn profiles for all of their team members. Analyze each profile to ensure the team members are actual people and the information posted is real.Read more about it here.

    The Project’s Details

    Each ICO writes a Whitepaper attempting to convince you to crowdfund their project. It’s your duty to analyze the project before investing your money. Surprisingly, most people invest in ICO projects while completely ignoring the project it’s developing.

    Take ClitCoin, for example. The name itself is already a red flag. Their platform was to help users buy things like drugs and sex toys anonymously. Users could pay for online sex shows and everything else related to adult content. Everything looked genuine until the company disappeared mysteriously.

    Another scam ICO, Prodeum, aimed to help people purchase genuine vegetables.  The ICO allegedly fundraised close to nothing and exited the stage. Scam ICOs often have a project with lots of red flags. If it’s not plagiarized from another project the whitepaper is poorly written. If the whitepaper looks professionally done, there are lots of questions left unanswered.

    Unrealistic Promises

    Some blockchain startups have previously been put on notice for promising unrealistic earnings to investors. BitConnect, though not an ICO, had a pyramid scheme that allegedly helped investors double their earnings within several weeks. The scheme went on for over a year before its downfall. LoopX also promised unrealistic income by using their trading program. The company ended up being a scam.

    There are no guarantees in the cryptocurrency industry. Any project that promises quick returns without any potential loss is probably a scam.

    Too Much Hype, Little to Show

    Advertising pays. And scam ICO founders known that too well. They will purchase Google ads, pay for social media ads and make their project almost everywhere your surf. They have excellent pitches and will seek support from several “trusted sources” but after quickly analyzing their project, it’s not worth the hype.

    Most such ICOs are not outright scams; they are just misleading but you shouldn’t invest in them either. An ICO worth investing is not built around hype but their product which should offer a solution to a common problem in an exceptional way.

    Red Flags on Forums like Reddit

    ICO investors increase day by day. They work together to identify the best projects and weed out scams. When analyzing an ICO for red flags, visit social forums where other investors will likely be having a similar discussion. Investors start raising red flags about a scam ICO on:

    • Reddit
    • Twitter
    • Bitcoin talk
    • org
    • YouTube

    Read reviews about the ICO you are planning on funding to understand what other investors think about them.

    Token Distribution

    Many legitimate ICO projects are open about their platforms and token distributions. They will use an open source program with a repository on Github and clearly written team member information. Their tokens are distributed proportionally and roadmap of how to achieve their Whitepaper project is clearly done.

    Scam ICOs on the other hand, have none or some of the above issues done properly. They will often promise to release most of their tokens at the time of the ICO only to exit as soon as the ICO closes.


    Every once in a while; an article about a scam ICO will appear on crypto websites. Sometimes everything about the project appears as red flags. Sometimes it’s not clear. To avoid being victimized by scammers, exercise caution when analyzing any ICO project. Use the tips featured above and only invest an amount of money you would be affording to lose.