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Fraud Schemes in the Cryptocurrency Industry

Story Highlights

  • Fake ICO

  • How to make sure the ICO is valid?

How to avoid becoming a victim

The growth of the blockchain space and cryptocurrency is attracting more and more attention. Technological innovations and the new paradigm of trading do not leave indifferent not only the broad masses, but also intruders.

Based on the Cryptonerds infographic, we have prepared a material that will help cryptocurrency users and investors to identify fraudulent schemes and avoid them. Recently, community members have become more aware of what they should pay attention to, but statistics show a continuing spread of such schemes.

Fake ICO

About 80% of ICOs conducted in 2017 were fraudulent. One example of such an ICO is the Confido campaign. In November 2017, the team raised $ 375,000 and soon disappeared along with investor money. When investors realized what was really going on, the price of the token collapsed from $ 0.60 to $ 0.10 in less than 2 hours and reached fractions of a cent in the next hours. And even bigger example of ICO scam is the Centra project, which raised $ 32 million and was promoted by celebrities such as Floyd Mayweather and DJ Khaled. In April 2018, the two project organizers were arrested, and, as in the case of Confido, his own coin quickly depreciated.

One of the typical tricks for conducting a fraudulent ICO is to use fake profiles of team members or consultants. Their profiles can use photos from both image repositories and well-known personalities, which can be found using Google’s image search function. If you find that the person with this photo has a different name, then most likely you are fraudsters, especially if this is a picture of actor Ryan Gosling, which was used by the Miroskii project in the designer’s profile.

Distribution of cryptocurrency in social networks

It must be remembered that groups and users in social networks (Facebook, Telegram and Twitter) are not always the ones they claim to be. If Vitaly Buterin or Andreas Antonopoulos suddenly offered you to “send 1 ETH to a certain address and get back N times more,” you should know that this is a fraud. Cryptocurrency is money, and, as you know, it is not customary to throw it away.

Clones of websites

Full copies of well-known project websites, usually ICOs or cryptocurrency exchanges, are used to steal user funds and personal data. Clone sites use similar characters in the URL so that it is difficult to distinguish it from the original during a quick glance. For example, they can replace “m” with “n” or “0” with “o”.

Scam in advertising

Do not trust the links placed in advertisements – they can lead to phishing sites. Examples include ads on Google leading to cryptocurrency exchanges, and ads on Reddit with offers to sell Trezor hardware wallets. Add the original version of the resources you need to bookmark and do not rely on the results of search results, especially on those that are posted on a fee basis. Some extensions for Chrome, such as Metamask, also help to avoid phishing sites.

DNS hacking

This attack allows an attacker to redirect traffic from a full-fledged site to its fraudulent copy, modifying the parameters in the domain name system.

The user uses the correct URL, but still gets to the phishing site. This is a particularly sophisticated trick, because even bookmarking a page does not save it.

In order not to become a victim of intruders, it is necessary to pay attention to the availability and correctness of the SSL certificate at the visited site. If it does not match the original or you get an error, do not enter your data on this page. You can also use local clients for services that offer them to their users.

Email scam

Also known as phishing, fake emails can be used to redirect users to fraudulent sites used to steal their funds and data. Attackers and other personal information can be obtained by attackers from past ICOs in order to send out their offers, allegedly related to other cryptocurrency projects.

How to make sure the ICO is valid?


  1. Are there people on the project site associated with it?
  2. Do they have active profiles on LinkedIn and other social networks?
  3. Do they have the original white paper or is it a copy, materials for which were borrowed from other projects?
  4. Do they have confirmed agreements with other well-known projects?
  5. Do they have a roadmap, a minimally viable product, or just an idea?
  6. Are they registered as an independent company?


If the project looks abandoned, most likely it is not worth your time and money. What do people say about this project in social networks? Does the project team interact with the community? How?


  1. Does the project need a blockchain, or is a classic database capable of solving it?
  2. Does the project technology solve the indicated problem?
  3. Are there other projects that solve the same problem by the same means?

Achievement list

  1. Does the project have a clearly defined goal?
  2. Did the team fulfill its promises on time in the past?
  3. Has the team encountered difficulties in the process? How did they solve them?
  4. Have any changes been made to the team structure lately?

With the spread of fraudulent schemes in the cryptocurrency industry, it is necessary to take all the proposals with a certain degree of skepticism. At the same time, there are many full-fledged projects deserving support and capable of generating income for investors. As in many aspects of our life, when working with finances, the most reasonable approach is to always remain vigilant. When you get to the new site, discover something that seems unrealistic to you, transfer your private keys and personal information, ask yourself if you are not putting yourself at excessive risk.


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