Remember 2017? Back then, it seemed like any project with the prefix "blockchain" was raising millions of dollars in a couple of days. People were pouring in their money without even looking, because "Bitcoin is going up, so this one will take off too." And then these "projects" disappeared along with the money. Now, in 2026, the system hasn't died—it's just mutated.
I almost got caught up in one such ICO myself. Luckily, a friend who'd already been burned talked me out of it. Then I researched the topic inside and out, and now I'm explaining how fake ICOs work, how to spot them, and how to avoid losing money.
Part 1: What is an ICO and why it's a scammer's paradise
An ICO (Initial Coin Offering) is when a startup issues its tokens and sells them to investors to raise money for development. In exchange, investors receive tokens, which are expected to appreciate in value if the project is successful.
Why is this scheme so attractive to scammers:
Low barrier to entry. No need to register a legal entity, obtain licenses, or undergo inspections. Just create a website, draw up a white paper, launch an ad, and off you go.
Lack of regulation. Crypto was a wild west for a long time. It's stricter now, but there are still jurisdictions where you can pull off this scheme without getting slapped.
Greed and FOMO. People see Bitcoin double in a month and are afraid of missing out on the next opportunity. They take advantage of this.
Complexity of the topic. The average person doesn't understand what a smart contract, Proof of Stake, or decentralized governance is. Scammers overload you with terminology, and the victim thinks, "Oh, those are cool guys, they know what they're talking about."
Part 2: What a typical fake ICO looks like – step-by-step
I've compiled a typical scenario that scammers follow. It's been honed to the point of automatism.
Step 1: Come up with a cover story. You need a story that will appeal to investors. For example:
"A decentralized educational platform where every teacher receives tokens for lessons."
"A new blockchain that's 1,000 times faster than Ethereum and doesn't consume any energy."
"AI that trades crypto and generates 50% annual returns in fiat."
The louder and more obscure, the better.
Step 2: Create a beautiful website and white paper. The website must be on WordPress with a cool design. Animations, graphs, and quotes from "experts" are included. The white paper is 30-40 pages long, containing:
10 pages of general information about blockchain;
10 pages about how everything will change;
5 pages of graphs and tables;
5 pages about the team (more on that later).
No specifics, but it looks solid.
Step 3: Create a "team of professionals." They take photos from Shutterstock (or steal from real people), invent names and job titles:
"John Smith - founder, former director of blockchain at Google";
"Li Wong - CTO, 20 years at Cisco";
"Anna Petrova - marketing advisor, worked with Microsoft."
No one will verify.
Step 4: Build hype
Buy ads from crypto bloggers (a review costs $500-$1,000).
Create a Telegram channel, recruit bots (they write "when is the listing?", "I already bought it, it's amazing").
Pay for articles on crypto news sites.
A month later, the project is the talk of the town.
Step 5: Fundraising. The ICO dates are announced and the wallet address (usually Ethereum) is published. People transfer Ether, expecting to receive tokens after the fundraising is complete.
Step 6: Rug Pull. Let's say they've raised $10 million. In one day:
· The website goes down;
· The Telegram channel is deleted;
· The admin accounts disappear;
· The crypto is sent to mixers and exchanges.
Investors are left with an empty wallet and a feeling of deep satisfaction.
Part 3: Red Flags – How to Recognize a Scam Before You Transfer Your Money
I've developed a checklist for myself. If even a couple of these points match, it's a no-no.
3.1. The team is anonymous or fake
· No real LinkedIn profiles.
· The photos look like stock photos (you can check this using an image search).
· Vague biographies, no specific projects.
3.2. They promise unrealistic returns: "20% per month," "100% annual interest in foreign currency." Cryptocurrency is volatile, and no one can guarantee a return. If they guarantee it, it's a scam.
3.3. No working product: Just an idea, just plans, just promises. Ask: "Where can I see a demo?" If there's not even an MVP (Minimum Viable Product), it's likely nothing will happen.
3.4. White Paper: Empty. Skim through the document. If it's full of generalities, no technical details, no description of the architecture, it's not a whitepaper, it's a brochure for idiots.
3.5. They push urgency: "20% discount today only," "last chance to join in the first stage." FOMO is a scammer's best friend.
3.6. No information about the legal entity. Legitimate projects usually register a company in some jurisdiction (Switzerland, Singapore, even Estonia). If there's nothing at all, it's a risk.
3.7. The community consists of bots. You go to a Telegram channel. 50 people read the posts, but comments are pouring in every minute. Bots are discussing how amazing their success is. It's easy to check: ask a difficult question. If no one responds or gives formulaic answers, there are no real people there.
3.8. Too much advertising from dubious bloggers. If a project is being promoted by info-gypsies and crypto "experts" who were selling courses on success a year ago, this is a warning sign.
Part 4: Real-World Examples (to make it clear)
4.1. Centra Tech. Raised $25 million in 2017. The team included "Visa partners" and "advisors from former Google employees." In reality, they were ordinary scammers. The founders went to jail, and the investors were left without money.
4.2. Pincoin and iFan. A Vietnamese project that promised 40% per month. They raised around $600 million. When it was time to withdraw the money, the offices closed, and the "founders" disappeared.
4.3. AriseBank. They promised "the first decentralized bank." They raised money using fake team photos and phony partnerships. The SEC intervened, but some of the money had already disappeared.
Part 5: How to Protect Yourself (DYOR — Do Your Own Research)
5.1. Check the Team. Find real people. If a LinkedIn profile is listed, but the person has 50 connections and no history, it's fake. If the photo matches a stock photo, Google Images will show it.
5.2. Read the White Paper Carefully. Don't trust graphs and tables. Look for answers to these questions:
What is the essence of the technology?
What is the consensus algorithm?
How are tokens distributed?
What will the raised funds be used for?
If it's just water, throw it away.
5.3. Look for a working product. At least a testnet, at least a demo version. If the project exists only on paper, it's not an investment, but a donation.
5.4. Check the code. If the project is open source, look at the repository. Are there many commits? Who's editing it? Or is it empty?
5.5. Look at the tokenomics. How many tokens does the team have? Are they locked up? If the team keeps 50% and can sell it at any time, it's a scam.
5.6. Don't fall for the hype. If everyone is shouting "buy, it's X on X," they're most likely shouting for you to buy, and they've already sold.
Part 6: What to do if you've already transferred money to a scam project
The chances of getting it back are almost zero. Cryptocurrency transactions are irreversible. But you can:
· Contact the exchange's support team (if you transferred through an exchange), in case they block it.
· Report it to law enforcement (if the amount is large).
· Complain about the website to your hosting provider so they can block it.
· Write a post on social media to warn others.
But be prepared that the money is gone forever.
Part 7: My mistakes (so you don't step on them)
· Mistake 1: I almost bought tokens for a project promoted by a famous YouTuber. I was saved by looking at the smart contract code. It contained a function allowing the creator to withdraw all the money at any time.
Mistake 2: I invested in a project with a "team from Stanford." It later turned out that these people had simply taken a two-week course there.
Mistake 3: I believed in the "partnership with Microsoft." The website had a Microsoft logo. It turned out that one of the team members had once worked there as an intern.
Problem 4: I went to a Telegram channel for an "active community." There were 10,000 people there. But only the admins answered questions; everyone else was silent. A bot cleanup revealed that there were only about 50 active people there.
Part 8: Alternatives to ICOs—Where to Invest if You Don't Want to Take Risks
The era of ICOs in their old form is over. They have been replaced by:
STO (Security Token Offering)—tokens that are legally considered securities. Investor protection is provided.
IEO (Initial Exchange Offering)—tokens are sold through an exchange that conducts preliminary verification.
IDO (Initial DEX Offering)—on decentralized exchanges, often with fairer terms.
Venture capital funds – if you want to invest in startups, it's best to do so through funds that conduct due diligence.
Bottom Line
Fake ICOs are a huge problem in the crypto market, but there's one simple solution: don't be greedy and verify the information.
If a project promises mountains of gold, the team hides behind avatars, and there's no product, it's a scam. Even if your favorite bloggers are promoting it. Even if everyone around you is buying it.
Remember: if you don't understand where the money is coming from, that money is yours.
I almost got caught up in one such ICO myself. Luckily, a friend who'd already been burned talked me out of it. Then I researched the topic inside and out, and now I'm explaining how fake ICOs work, how to spot them, and how to avoid losing money.
Part 1: What is an ICO and why it's a scammer's paradise
An ICO (Initial Coin Offering) is when a startup issues its tokens and sells them to investors to raise money for development. In exchange, investors receive tokens, which are expected to appreciate in value if the project is successful.
Why is this scheme so attractive to scammers:
Low barrier to entry. No need to register a legal entity, obtain licenses, or undergo inspections. Just create a website, draw up a white paper, launch an ad, and off you go.
Lack of regulation. Crypto was a wild west for a long time. It's stricter now, but there are still jurisdictions where you can pull off this scheme without getting slapped.
Greed and FOMO. People see Bitcoin double in a month and are afraid of missing out on the next opportunity. They take advantage of this.
Complexity of the topic. The average person doesn't understand what a smart contract, Proof of Stake, or decentralized governance is. Scammers overload you with terminology, and the victim thinks, "Oh, those are cool guys, they know what they're talking about."
Part 2: What a typical fake ICO looks like – step-by-step
I've compiled a typical scenario that scammers follow. It's been honed to the point of automatism.
Step 1: Come up with a cover story. You need a story that will appeal to investors. For example:
"A decentralized educational platform where every teacher receives tokens for lessons."
"A new blockchain that's 1,000 times faster than Ethereum and doesn't consume any energy."
"AI that trades crypto and generates 50% annual returns in fiat."
The louder and more obscure, the better.
Step 2: Create a beautiful website and white paper. The website must be on WordPress with a cool design. Animations, graphs, and quotes from "experts" are included. The white paper is 30-40 pages long, containing:
10 pages of general information about blockchain;
10 pages about how everything will change;
5 pages of graphs and tables;
5 pages about the team (more on that later).
No specifics, but it looks solid.
Step 3: Create a "team of professionals." They take photos from Shutterstock (or steal from real people), invent names and job titles:
"John Smith - founder, former director of blockchain at Google";
"Li Wong - CTO, 20 years at Cisco";
"Anna Petrova - marketing advisor, worked with Microsoft."
No one will verify.
Step 4: Build hype
Buy ads from crypto bloggers (a review costs $500-$1,000).
Create a Telegram channel, recruit bots (they write "when is the listing?", "I already bought it, it's amazing").
Pay for articles on crypto news sites.
A month later, the project is the talk of the town.
Step 5: Fundraising. The ICO dates are announced and the wallet address (usually Ethereum) is published. People transfer Ether, expecting to receive tokens after the fundraising is complete.
Step 6: Rug Pull. Let's say they've raised $10 million. In one day:
· The website goes down;
· The Telegram channel is deleted;
· The admin accounts disappear;
· The crypto is sent to mixers and exchanges.
Investors are left with an empty wallet and a feeling of deep satisfaction.
Part 3: Red Flags – How to Recognize a Scam Before You Transfer Your Money
I've developed a checklist for myself. If even a couple of these points match, it's a no-no.
3.1. The team is anonymous or fake
· No real LinkedIn profiles.
· The photos look like stock photos (you can check this using an image search).
· Vague biographies, no specific projects.
3.2. They promise unrealistic returns: "20% per month," "100% annual interest in foreign currency." Cryptocurrency is volatile, and no one can guarantee a return. If they guarantee it, it's a scam.
3.3. No working product: Just an idea, just plans, just promises. Ask: "Where can I see a demo?" If there's not even an MVP (Minimum Viable Product), it's likely nothing will happen.
3.4. White Paper: Empty. Skim through the document. If it's full of generalities, no technical details, no description of the architecture, it's not a whitepaper, it's a brochure for idiots.
3.5. They push urgency: "20% discount today only," "last chance to join in the first stage." FOMO is a scammer's best friend.
3.6. No information about the legal entity. Legitimate projects usually register a company in some jurisdiction (Switzerland, Singapore, even Estonia). If there's nothing at all, it's a risk.
3.7. The community consists of bots. You go to a Telegram channel. 50 people read the posts, but comments are pouring in every minute. Bots are discussing how amazing their success is. It's easy to check: ask a difficult question. If no one responds or gives formulaic answers, there are no real people there.
3.8. Too much advertising from dubious bloggers. If a project is being promoted by info-gypsies and crypto "experts" who were selling courses on success a year ago, this is a warning sign.
Part 4: Real-World Examples (to make it clear)
4.1. Centra Tech. Raised $25 million in 2017. The team included "Visa partners" and "advisors from former Google employees." In reality, they were ordinary scammers. The founders went to jail, and the investors were left without money.
4.2. Pincoin and iFan. A Vietnamese project that promised 40% per month. They raised around $600 million. When it was time to withdraw the money, the offices closed, and the "founders" disappeared.
4.3. AriseBank. They promised "the first decentralized bank." They raised money using fake team photos and phony partnerships. The SEC intervened, but some of the money had already disappeared.
Part 5: How to Protect Yourself (DYOR — Do Your Own Research)
5.1. Check the Team. Find real people. If a LinkedIn profile is listed, but the person has 50 connections and no history, it's fake. If the photo matches a stock photo, Google Images will show it.
5.2. Read the White Paper Carefully. Don't trust graphs and tables. Look for answers to these questions:
What is the essence of the technology?
What is the consensus algorithm?
How are tokens distributed?
What will the raised funds be used for?
If it's just water, throw it away.
5.3. Look for a working product. At least a testnet, at least a demo version. If the project exists only on paper, it's not an investment, but a donation.
5.4. Check the code. If the project is open source, look at the repository. Are there many commits? Who's editing it? Or is it empty?
5.5. Look at the tokenomics. How many tokens does the team have? Are they locked up? If the team keeps 50% and can sell it at any time, it's a scam.
5.6. Don't fall for the hype. If everyone is shouting "buy, it's X on X," they're most likely shouting for you to buy, and they've already sold.
Part 6: What to do if you've already transferred money to a scam project
The chances of getting it back are almost zero. Cryptocurrency transactions are irreversible. But you can:
· Contact the exchange's support team (if you transferred through an exchange), in case they block it.
· Report it to law enforcement (if the amount is large).
· Complain about the website to your hosting provider so they can block it.
· Write a post on social media to warn others.
But be prepared that the money is gone forever.
Part 7: My mistakes (so you don't step on them)
· Mistake 1: I almost bought tokens for a project promoted by a famous YouTuber. I was saved by looking at the smart contract code. It contained a function allowing the creator to withdraw all the money at any time.
Mistake 2: I invested in a project with a "team from Stanford." It later turned out that these people had simply taken a two-week course there.
Mistake 3: I believed in the "partnership with Microsoft." The website had a Microsoft logo. It turned out that one of the team members had once worked there as an intern.
Problem 4: I went to a Telegram channel for an "active community." There were 10,000 people there. But only the admins answered questions; everyone else was silent. A bot cleanup revealed that there were only about 50 active people there.
Part 8: Alternatives to ICOs—Where to Invest if You Don't Want to Take Risks
The era of ICOs in their old form is over. They have been replaced by:
STO (Security Token Offering)—tokens that are legally considered securities. Investor protection is provided.
IEO (Initial Exchange Offering)—tokens are sold through an exchange that conducts preliminary verification.
IDO (Initial DEX Offering)—on decentralized exchanges, often with fairer terms.
Venture capital funds – if you want to invest in startups, it's best to do so through funds that conduct due diligence.
Bottom Line
Fake ICOs are a huge problem in the crypto market, but there's one simple solution: don't be greedy and verify the information.
If a project promises mountains of gold, the team hides behind avatars, and there's no product, it's a scam. Even if your favorite bloggers are promoting it. Even if everyone around you is buying it.
Remember: if you don't understand where the money is coming from, that money is yours.
