ICO investment guide to review before you leap

When reviewing a new cryptocurrency project or vendor, there is a certain amount of due diligence required. The crypto space is notorious for an abundance of charlatans, phishers and scammers which seem to only get more sophisticated and verisimilar by the day. Here is a quick checklist to run through when approaching or being approached by a party or project in crypto.

When considering an ICO Investment, ask yourself the following:

Does the ICO have its team present on a Linked In page? Are the Linked In pages of established team members completely filled out and legitimate looking?

Linkedin is a good measure of legitimacy, because accounts have a history and typically are directly linked to from company/personal materials. Crunchbase is also a good resource for startups.

Does the ICO have a full legal compliance section in the whitepaper? Have you read it and does it measure up against those of successful ICO’s?

The legal section should protect both the ICO and you as investor from liability. It should clearly delineate the nature of the token, and what the company is actually “on the hook” for delivering. A legal section that is only one or two pages probably does not cover everything it needs to. Typically, the US is excluded from ICO’s, if they are permitted this could be a red flag.

Does the ICO present its token as either having profit-sharing, equity-sharing, or automatic payouts of additional tokens? If so it may be a non-compliant security token.

If considering investing a large amount, it might be worth getting an opinion from a crypto-savvy financial advisor or lawyer. ICO’s that are non-compliant have several risks for investors beyond the norm - for example, the token network could be shut down by a government entity.

Does the ICO present a real, scalable solution to a tangible, common problem?

This comes down to the utility of the project as a whole. What problem are they actually trying to solve? Does it appear they have the resources to do so, including a devoted community?

Does the ICO have an active community on Telegram, Discord and/or Bitcointalk.org?

Community is everything in crypto. It can make or break a project, because a community isn’t just users - they actively help grow and support the project. When thousands of people come together on an idea, and contribute to it, it’s potential is extremely strong. On the reverse, a sparse or absent community can bring down even the most technically solvent projects.

For general crypto:

When approached by a social media vendor/influencer, can they verify their identity through the channel they are claiming to represent? Eg, if emailed by a Twitter promoter, can they message you from the mentioned Twitter account?
This is a basic anti-phishing verification. Many scammers send unsolicited emails and Telegram messages pretending to be the owner of an influencer account or crypto site elsewhere. Always best to verify on the platform/company email itself.

Does the vendor have verifiable results or analytics, or verifiable references? Are they willing to provide an invoice with verifiable personal/company information?

We all know “KYC” is big, but what about knowing your vendor? Anyone who claims to have an established service in the space should have contact info for customers who used and appreciated their service. Anyone who does not want to provide a proper invoice may also not be legitimate. Check and double check the person you are speaking with is an authorized rep, send an email to the address listed on their main site, connect on linked in, and so on.

Does the deal overall seem too good to be true? Eg, a homepage feature on Coindesk for .5 ETH?

Many phishers and scammers will bait victims with seemingly insignificant asks - For example, being featured in so-and-so top ICO list for .1 BTC. Pursue all necessary verifications, and as a rule it might be wise to ignore all solicitations altogether, using only services you pursue or are recommended by trusted members of your network.

Does their email match the corporate domain?

Make sure no false characters are substituted. Phishers are everywhere. Scammers are even known to use a program that covers their email with one from the corporate address. Again, be wary of all solicitations - it’s smart to assume it’s a scam from the get-go, and work your way backwards with secondary and tertiary verifications if you are truly intrigued.

If still uncertain, are they willing to post the content then accept payment, potentially after a small deposit? Are they willing to Skype?

This is another form of verification, can the crypto site post your banner or content temporarily to verify they indeed can? Can a youtuber put your company name in his channel description for five minutes? These are a quick method for determining authenticity, that genuine providers will often agree to.

In sum, one must be extremely wary and skeptical when operating in the cryptocurrency space. The high degree of anonymity enables scammers and the like to operate with little to no repercussions, meaning the responsibility for maintaining security and not being scammed falls wholly on the individual. When considering engaging a service provider or joining an ICO, be sure to check them against the above points. As you work your way down the list, it will become more and more apparent whether the other party is indeed a valuable opportunity, or just an attempt to steal your coin.

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