1 k views

How to avoid buying into an ICO or Token Sale that is destined to fail

An Initial Coin Offering (ICO) is an easy way of investing in a blockchain-based project that is still developing. With good research, intuition, and luck, you may buy into a future cryptocurrency with global recognition. The next ICO could be the one that brings you a substantial ROI. However, it could also be one of the many that fail or turn out to be a hoax.

Despite their continuous loss of credibility, ICOs remain widely popular. Today, we focus on the giveaway signs of failing ICOs and how to spot them a mile ahead.

What is an ICO

An Initial Coin Offering (ICO) is a fundraising method companies use to build financial and user support for an upcoming blockchain project.

The ICO is the favorite tool of startups to attract capital for their first projects, especially because they have to battle anonymity. First, they start with a whitepaper detailing the roadmap of the project. Next, they sell coins in return for the necessary funds to turn them into a real things. In the end, the investors can keep their tokens, sell them, or exchange them for other cryptos or fiat money.

ICOs are the first fundraising strategies that appeared in the world of cryptocurrency, and they follow similar rules to real-world Initial Public Offerings (IPOs).

Are ICOs still worth buying?

In recent years, we have seen the development of Security Token Offerings (STOs), which proved to be more advantageous and less risky than ICOs. However, even Initial Exchange Offerings (IEOs) garnered more investors’ support, even if their results were unsatisfactory.

Still, Initial Coin Offerings remain a viable source of crowdfunding for companies and feasible addition to your portfolio. As long as you do your due diligence, you can identify potentially successful ICOs with stellar benefits in the long run.

Some of the best advantages that ICOs have to offer to include the following:

  • Fast-selling ICOs can help projects develop quickly.
  • Investors get a clear view of the roadmap ahead.
  • Unfortunately, the token prices are usually dismal and available for most crypto investors.

ICOs are still popular, also thanks to a history of successful projects. Some developed into world-renowned enterprises that brought significant profit even to the smallest investors who decided to bet on them from the start. However, the ones who failed to read into their potential still lament their lack of intuition.

The risks of investing in an ICO

Despite their current success, notable projects based on Initial Coin Offerings do not guarantee the same progress for other ICOs. It takes plenty of research, experience, and intuition to understand the difference between a potentially high-rewarding ICO and one that may be camouflaging a scam.

Some of the biggest risks of buying into an ICO include the following:

  • ICOs are not fully regulated in numerous jurisdictions.
  • The high number of ICO proposals increases the risks of fraud and scams.
  • Once they hit the market, the tokens may lose most of their value due to intense volatility.

In recent years, the crypto community has witnessed several fraudulent ICOs, and investors have grown worrisome and reluctant to invest in such projects.

Some of the most famous ICO scams include:

Ifan / Pincoin

In 2018, a company allegedly based in Dubai and Singapore proposed two projects called Ifan and Pincoin for ICO. Through their Vietnam-based representative Modern Tech they managed to dupe more than 32,000 investors into funding a future Ethereum ERC-20 token in exchange for returns of up to 40% per month. However, one day, the developers quit the projects and disappeared with more than $660 million.


The Times called OneCoin “one of the biggest scams in history.” The Ponzi scheme developed by two Bulgaria-based off-shore companies managed to get away with more than $4 billion amassed from investors between 2015 and 2017.

OneCoin pretended to sell educational packages that would also come with digital tokens called OneCoins. Investors were allowed to “mine” for them on two websites based in Bulgaria and Hong Kong. They could also exchange them for fiat currency, EUR in this case, on the company-powered OneCoin Exchange, which robbed everyone of their money when it suddenly closed in January 2017.

To this date, the authorities have managed to catch, trial, and imprison most of the people behind OneCoin.


Today, most people remember Bitconnect for the memes that one of its investors inadvertently generated during their first (and only) annual ceremony in Pattaya, Thailand.

However, between 2016 and 2018, Bitconnect managed to fool investors worldwide with a Ponzi scheme that authorities saw from afar but could not prove. As a result, its native token, the Bitconnect coin, went from a post-ICO price of $0.17 to an all-time high of US$463 in December 2017.

A month later, Bitconnect suddenly shut down. While the authorities managed to catch most of the perpetrators, almost $2.6 billion were lost forever.

How to avoid investing in a failing ICO

Even if ICOs have been the subject of massive scams in the past, it does not mean that you have to discredit all the projects that use this capital-raising method. If you are keen on investing in a platform that uses ICO to kick-start its activity, you should use these simple but effective preventive measures:

Research, the development team

The first step to understanding the potential of an ICO-based project is researching its developers. If they are anonymous, you should stay away from them. Likewise, you might want to look elsewhere if they are associated with shady ICOs that have previously failed.

Check the news

When a company issues an ICO proposal, the news spreads through the cryptocurrency community almost instantly. You can find analysis, forecasts, and experts’ opinions on the upcoming project with some research. As a result, you can easily determine if the project is worth your money.

Analyze the whitepaper

Every blockchain-based project that starts with an ICO has a well-structured whitepaper. In this document, you should be able to identify whether the roadmap is realistic. In addition, you can evaluate the quality of the code and determine if the terms and conditions are feasible for the project’s long-term evolution.

Engage in community discussions about it

Last but not least, you should talk about it with other crypto community members. Then, contrary to a few years ago, more investors, experts, and commentators can offer their honest opinion on the ICO you are willing to fund.

The Bottom Line

Bitcoin live price
price change

In the end, buying into an ICO brings the same risk of failure that most financial ventures pose. It would be best if you had a good understanding of the cryptocurrency market and the industry’s developments to have a higher chance of investing in a potentially successful project.

Stay up to date with our latest articles

More posts

How Can Social Media Benefit from NFTs and Blockchain Technology?

The digital world is transforming in ways we never imagined, and Non-Fungible Tokens (NFTs) are leading the way. Thanks to blockchain technology and NFTs, social media platforms are beginning to experience a new level of engagement. From customizable avatars to augmented reality items, NFTs are giving big tech companies new ideas. This article will explore the potential benefits of using NFTs for social media platforms and the sector’s best practices. In this context, Instagram's experiment with NFTs represents a peculiar…

From Web2 to Web3 – How to Move an Existing Project to the Blockchain

Web2 and Web3 are two different generations of the World Wide Web. While Web2 is a centralized platform, Web3 is decentralized and powered by blockchain technology.  The success of Web3 has been enormous, with many people now moving from Web2 to take advantage of its benefits.  However, the path to Web3 is not always straightforward. It is complicated and requires a deep understanding of both technologies. Today's guide will ensure you have the right information to successfully move from Web2…

The Role of a Valid Go-To-Market Strategy in a Crypto Project Success

In the rapidly evolving world of cryptocurrency, a good go-to-market strategy is essential for any project to achieve success. Unfortunately, it's not enough to create an innovative product. You must also know how to reach your target market and effectively promote it to gain traction.  With careful planning and execution, you can develop an effective launch plan to maximize your chances of success in crypto. This article will discuss the importance of a go-to-market strategy and common mistakes when developing…

How Can a Team Create Market Traction on Its Crypto Project?

Market traction is a must-have if you want to create real, lasting success with your crypto project. But how do you ensure your team achieves the traction needed to drive meaningful growth?  This guide will explore some strategic methods for building and maintaining momentum in the crypto sector. Never underestimate the power of effective market traction – it could be the key to unlocking your project's potential. Why You Need Market Traction in the Crypto Sector The success of any…

Which Features Should a Successful Crypto Team Possess?

Creating a successful crypto team becomes imperative to succeed in this industry. This is particularly true as more people come together and launch their digital currencies or tokens. The right team and set of skills can make a huge difference in the overall success of your crypto project. This guide will explore features a successful crypto team should possess to ensure long-term success. Is There an Ideal Profile for a Crypto Team? A successful crypto team should be composed of…

What Happens When a Stablecoin Loses Its Parity (Depegging)?

Have you heard of stablecoins, the digital currencies designed to maintain a stable value? Stablecoins have become increasingly popular, and many people consider them an attractive investment option. But what happens if a stablecoin loses its parity, and how does it impact investors?   Understanding the General Concept of Stablecoins Before discussing a stablecoin losing its parity, we first need to grasp how these tokens work. Stablecoins are cryptocurrencies tied to fiat currencies like the U.S. Dollar or Euro. This means…

What You Need to Know Before Investing in a Crypto Project with Anonymous Team

Investing in a cryptocurrency project can be an exciting way to grow your wealth, but it can also be risky. Investing in a crypto project with an anonymous team adds complexity and risks. The Phenomenon of Anonymous Crypto Teams If you explore the Internet for financial ideas, you've probably already encountered anonymous crypto teams. Some cryptocurrency teams that stay anonymous are growing successful. Some anonymous crypto teams have succeeded, despite traditional investors' reluctance toward them. For example, to this day,…

NFT Plagiarism Phenomenon – A Beginner’s Guide

The world of Non-Fungible Tokens (NFTs) has attracted creativity and innovation, reshaping the global art scene. However, it has also brought a new challenge for creators – the risk of their work being plagiarized or stolen. In this beginner's guide, we explore the NFT Plagiarism phenomenon and offer some strategies to protect your original content. We will also share some tips for creating original NFTs that are harder to copy. The Phenomenon of NFT Plagiarism NFT plagiarism has become increasingly…

How to Write a Crypto Whitepaper – A Beginner’s Guide

With the rise of cryptocurrency, it's no surprise that many people want to get involved in the industry. But before launching a successful crypto project, one of the most important steps is writing an effective whitepaper. A whitepaper serves as a document that outlines your project and explains its core components and strategies for success. This process may seem daunting and overwhelming for those who have never written a whitepaper. This guide aims to help beginners understand how to write…

The Dark Side of Crypto – Fear, Uncertainty, and Doubt (FUD)

Cryptocurrency markets are vulnerable to the fear, uncertainty, and doubt (FUD) strategy malicious actors use. Considering the importance of expectations on the financial markets, understanding FUD is essential for traders and investors. Over the years, media, social networks, and lawmakers have played a key role in spreading FUD. But what exactly is FUD, and how can investors protect themselves? In this article, we explore the use of FUD in the crypto industry and its impact on traders. Understanding FUD in…