Cryptocurrency: Spotting Pre-ICO Scams

ICOs are the most fashionable thing to do nowadays: Learn some blockchain
technology, practice token creation on Ether testnet, write some whitepaper and
then ask for ETH in exchange for some worthless tokens. To make things worse,
scammers are trying to squeeze money from pre-sales before official ICO.

Most of “investors” are actually speculating and ready to dump the tokens at the
first opportune moment when they are tradable on EtherDelta or other exchanges.
Pre-sales usually offer 20–30% discount/ETH on ICO price. Scammers use the
official channels (Telegram, Slack) to exploit impulse and FOMO (fear of missing
opportunities): 50% discount pre-launch and must buy within 24 hours for any
amount:

Scammer misrepresenting Bloom protocol

When you spot anything that is too good to be true and exploits FOMO, take a
step back, breathe in slowly and open EtherScan to verify that address:

If it were a real contract, you would see tokens given back to the buyer. Some
people have fallen prey to the scammer. Let’s check an inward transaction:

This one looks like a normal ETH transfer and is nothing like a smart contract
transaction. This is an example of valid contract address by AirSwap and below
is a valid contract transaction:

Valid contract transaction (see the fields “To” and “Input Data”)

Another red flag: Why we need Bitcoin address here? The token was supposed
to be bought and sold via Ethereum smart contract!

If you are still in doubt, let’s do some googling for those addresses. I have
bad news: To your horror, these addresses have been recycled and reused for
multiple ICOs, at least RequestNetwork and PayCent:

Scammer misrepresenting RequestNetwork —
https://to-email.com/find-email/a09642f59f8de614fe10f2085a3093f4

Scammer misrepresenting PayCent —
https://bitcointalk.org/index.php?topic=2173711.380

I hope you are now convinced that any too good to be true offers are likely
scams. You also can inspect the Bitcoin address that is being reused.

Key Takeaways to Protect Yourself

1. Never act on impulse. That’s the surest way to lose
2. “Dear Subscriber” phrase used in the scams above should send you chills down the spine. Remember to subscribe to official channels and give them your name or some ID that only you know
3. If the site doesn’t ask for KYC (know your customer), be doubtful. But don’t be so quick to send your documents either
4. Buy tokens via Metamask (which will require you to visit the official website), never send directly to addresses. Many ICOs allow only Metamask to protect investors
5. Legitimate ICOs will likely have an ENS name in format my-ico.eth to map their Ethereum contract address
6. Using Bitcoin addresses to buy ERC20 tokens on Ethereum should give you plenty of doubt
7. Be sure to google the addresses given. A little search goes a long way to protect your sanity
8. Check against https://etherscan.io/ to verify if it’s a normal address or contract address
9. Don’t be the first one to buy. Exercise healthy caution. Real ICOs won’t rush people