Increasing popularity of initial coin offerings as a means of funding a startup led to exploding the number of projects on the market as well as some evident problems those are normal for a niche becoming very big. First of all, the quality of project preparation and the level of attention for details dropped drastically, making the choice of investment, on one hand, easier, as around half of applications from ICOs get declined nowadays reducing the number of projects published. On the other hand, the number of ICOs published on ICObench is at the moment over 1,600 which makes it easy to get lost in numerous projects even inside one industry. This is a common inconvenience for a market growing huge and it brings no potential danger to an investor.

The other big problem can cause much more harm to people investing in startups via initial coin offering. Fraudulent and fake projects appear every day and on the wave of ICO rise they are growing like weeds and getting smarter and trickier.

Here is a long but not even close to full list of tricks used by fraudulent ICOs:

Hiring a real agency so they can bring it down once the fraud is exposed;

Inviting well-known experts from business and blockchain community as project’s advisors, making them lose their credibility;

Taking stock or other photos and edit them to the level where Google image search can do nothing with them;

Using real people having nothing to do with the project as team members with their real photos and real names;

Having non-existent media publications listed on the site;

Putting listing sites on their site as media partners before the project is even listed.

Thanks to the community even such intricate schemes get revealed sooner or later. Unfortunately, the exposure can come too late for some investors. Or a person can just ignore or miss a notification and get carried away by skillful marketing. This is the main reason why we delist scam ICOs from the platform and the API. We receive emails from our users and visitors who think they are addressing projects using our contact form every day. Furthermore, over 200 projects use our Data API so the information would spread. The only practical way to protect our users and partners is to stop sharing any information on the fraudulent ICO as soon as we have a concrete proof.

The first red flags we usually see in an ICO those make us check it more thoroughly are:

Team members photos looking like typical stock photos;

Social network icons without links to actual social profiles;

The name under the photo doesn’t comply with the person’s gender;

Cartoon pictures instead of actual photos for the team members;

Using our experts’ photos with wrong names under them;

Naming the team members photos person-1, person-2 or like that;

Team members having LinkedIn profiles without pictures;

Scam accusations on Bitcointalk or Reddit;

Google image search showing that the team member photo is available only on the ICO page;

There are clear statements of MLM on the website or promises of huge returns without any backup;

Domain’s WHOIS information is hidden;

Logo or other graphic elements stolen from another project;

White paper was fully or partly stolen from another project;

Project roadmap consisting of simple milestones like “idea”, “ICO start”, “ICO end”, “token goes on exchanges” without describing any actual plans.

These and other suspicious features catch our attention every day, pushing us into further investigation. The ICObench community also brings us new evidence of fraud on daily basis, and we highly appreciate this contribution. Projects like Benebit or World of Battles managed to fool a lot of people being almost perfectly made up, but the always cautious crypto community was able to expose them. The story doesn’t end once the scam ICO is delisted as it can harm people outside our platform on third-party applications or sites. That is why it is so important to come forward and notify the authorities.

We want to remind investors to do their own research before sending their hard earned money to an ICO just based on the rating or hype around it. Guard up, don’t base your investment decision solely on the number of likes, followers, and scores but also on your intuition and knowledge. Everyone makes mistakes, and blaming the advisors and reviewers is not the way to fight scam ICOs but just a transfer of your responsibility as an investor.

Where are we heading next?

Just like you, we need to move forward and adapt to the market like the fraudsters did. Verifying only suspicious teams has been confirmed as not efficient enough. Now it is time to raise our standards on a wider scale and provide the results of this improvement via our Data API in order to share awareness with everyone.

We have already hired additional staff and are in process of implementing KYC procedure to verify individuals and ICOs’ teams on a voluntary basis. Everyone participating in the process will be rewarded with an authenticity badge and an additional score from Benchy. Even though we believe this step would help to further weed out potentially fraudulent ICOs, it is still not enough to blindly trust its results.

As we are focusing on prevention we are also working on a browser extension that will help users access all ratings directly and anonymously from their browsers while visiting ICO’s website. At the same time this extension could be used to detect websites that are not directly connected with the ICO (potentially phishing site, delisted ICO or not yet published) as it would only work with websites that are known to ICObench.

Public call

If you have any evidence of a fraud run by an ICO that is published on our platform, please send it via contact form or press the “Report” button in the alleged scam ICO profile. Provide as many materials as you can — screenshots, links, and other proof of scam you can get your hands on.