The Crypto Guide for Beginners – How to identify an ICO scam!

What is phishing?

Where there is money, there are scammers. „Phishing“ is the term given to these crypto-related scams, whose primary purpose is to relieve investors of their hard-earned money without giving them anything in return.

Because the word „scam“ keeps popping up in relation to cryptos, a certain stigma has developed around these alternative currencies. Sometimes, labeling something a scam actually does reveal a scam; other times, however, the title „scam“ is added to legitimate projects, causing many investors to shy away from enterprises with great futures.

Check out our article “What to know before investing in an ICO” to find out more about how to evaluate an ICO!

What are some common scams used in the crypto world?

There are several different approaches scammers use to steal your money:

  • Asking for your wallet’s private key to verify information or to give you add-ons for your wallet: No real ICO or wallet provider will ever ask you for your private key. With ICOs, you should be able to send cryptos to the designated wallet address on their website without having to type in your private key anywhere. If anyone asks for your private key, you should be worried – once they have a private key to your wallet, they can take your money effortlessly and run.
  • Fake wallets: Recently there has been a surge of problems regarding fake Ethereum wallets: a single letter differentiated between a real Ethereum wallet and a scammy one. Make sure to get your wallet from an official wallet provider. Check for any typos in the website address or for a wrong domain.
  • Team identity thefts: Scammers do not hesitate to lure you into an „official“ channel of a popular ICO and impersonate a team member to gain your trust before presenting you with a wallet address to invest in.
  • Ponzi schemes – aka affiliate programs: Giving away free tokens as a bonus or as an incentive for marketing an ICO is a legit promotional tool to raise awareness of the product. However, scammers have found a way to exploit these offerings by turning them into Ponzi schemes. So do a double check of the affiliate program for an ICO to ensure that it has a valid ICO in the background; otherwise it is most likely just a basic Ponzi scheme, backed by worthless cryptocurrencies.
  • Airdropping: Airdropping is another fair marketing tactic that is being abused by scammers. Namely, airdropping is a way of raising awareness of a new crypto by giving away new free cryptos to people who already own big cryptos such as Bitcoin, Ether, etc. Real airdropping marketers ask for your public wallet key; if they ask for your private wallet key, refer back to point one!

How to avoid getting phished in the crypto world:

There are several precautionary measures you should take to avoid your chances of getting phished:

  • Bookmark the original ICO’s web address to ensure you don’t accidentally land on a phishing site.
  • Double check with the ICO that the official communication channel you utilize the right one. Make sure to communicate directly with the ICO team regarding any misunderstandings.
  • Make sure that you don’t enter your private crypto key anywhere. Better yet, make sure you are never asked for it in the first place! Once scammers have your private key, they can use all the money stored there as they like.
  • Pay attention to typos and the spelling of domain names for any link you might receive, and then compare them with the original ones.
  • Use official scanners to test the wallet you intend to send your money to. If you see that an ICO wallet is considered a scam, you might want to check for other ICOs to invest in.

Please keep these in mind while you invest so that you don’t get scammed in the process!