5 Memorable ICO Scams

Vlad Costea
  • While ICOs can turn you into a Borgias for a Michelangelo who's going to paint the blockchain equivalent of the Sistine Chapel, there are still plenty of scams that damage both your wallet and the reputation of this way of financing start-ups.
  • Always make sure you're investing in a legitimate project: read the whitepaper and scan for excessive buzzwords, check out the developers, try to envision the purpose and use of the project, look for the opinion of rating websites, and inquire about a trusted escrow company.

So you've finally decided to make use of your hard-earned Ethereum (ETH) coins by converting them into the tokens of a promising initial coin offering (ICO). It's a great way for you to become a patron, somebody who sees potential in a project and helps it reach its goal. You may think that you're some kind of modern-day Borgias who's found his DaVinci, Buonaroti, and Raphael in a crew of software engineers whose vision had been written in a whitepaper.

If the project is truly legitimate and meets your expectations, you might just get rich off of HODLing those sweet tokens. Nevertheless, you must be cautious and completely aware of the fact that the odds are stacked against your idealistic expectations and the number of successful ICOs is disappointingly low.

That's why we thought it would be a good idea to make a short list of scams and big disappointments, just so you know what to expect. The "invest only what you can afford to lose" rule is definitely the Northern Star which must guide all of your moves in the space, and sometimes the difference between the next big top 10 token and the exit scam of the week is given by very elusive details and relative circumstances.

You can't always win, you can't always get what you want, and someone actually has to lose in order to create the next wave of crypto millionaires. And if you've invested in any of these, then you've definitely filled the bags and pockets of a selected elite whom you'll never encounter in your life unless you get exclusive access to some well-hidden luxurious island in the Pacific Ocean.

1. SaveDroid's South Park-Referencing “Gone Not Gone” Scam

The first ICO mentioned is also the latest to cause a buzz among the community, as the German team has pulled a nifty exit scam and ran away with about $50 million.

They promised they would build a savings app which would allow users to use their hard-earned money for AI-handpicked investments. Because really, the future belongs to competing trading bots (or droids) who make rapid financial exchanges based on the same algorithms that don't make mistakes, and thus don't move the markets at all. Sounds totally legit, right?

It was the general "too good to be true" project which also had included a cryptocurrency-funded credit card on the roadmap, but left the moment the ICO ended. Their departure message was as light-hearted as can be, as a South Park meme from the "Margaritaville" episode covered the front page of their website.

But wait, there's more to it and the entire story has a twist: after the company's CEO had hinted on his Twitter account that he did actually pull an exit scam, he returned the following day to provide some explanations.

As detailed in James McQuillan's article on our website, SaveDroid had only tried to show the world how easy it is to raise funds and run away in an unregulated market which doesn't possess the legal means to bring you to justice. To put it plainly, it was a scam about making a point on scams, and the SaveDroid leader promised he would work with authorities to create a fair framework for regulations.

Are they gone or not gone? Is there going to be a double twist to the entire story? It doesn't matter, investors are very upset and it's still unclear whether or not they will ever see their money back. Proving a point can cost $50 million, right?

2. Bitconnect X's Encore

Speaking of memes and occult bots which make trades with the users' savings, it's Carlos Matos' favorite ICO, because we all know he ‘LOOOOOOOOOOOOOOOOOOOOOOOOOOVES BITCONNEEEEEEEEEECT!’ Back in January 2018, in spite of all the warnings from reputable cryptocurrency experts and red flags, people still believed that Bitconnect was the perfect way to get rich quickly.

Trevon James did it, a 17-year old named Crypto Nick has become a millionaire, so why shouldn't everyone else get the daily 1 percent returns? There was no way for the system to turn out to be a Ponzi scheme like the hateful venom-spitting critics claimed to, right? They were probably jealous about the gains they didn't make.

Well, Bitconnect did collapse and people lost a lot of Bitcoin (which was the entry ticket into the system) just to keep on holding onto worthless tokens. But there seemed to be a safety net that users hung onto, because there is no way the same company would attempt a second scam: Bitconnect X was announced as an ICO in early 2018 and pretty much promised nothing other than being listed on CoinMarketCap!

The admission fee was $50 per token, and lots of BCC enthusiasts jumped right in, but the entire project crashed and burned just like its longer-lived predecessor. It's like that old saying "Fool me once, shame on you. Fool me twice, I LOOOOOOOVE BITCONNEEEEEEEEEEEEEEECT!"

3. Prodeum's Phallic Complex

The blockchain can have many revolutionary uses, and a team of Lithuanian programmers thought about involving the industry of fruits and vegetables into such a process.

 It all seemed legitimate and unique: their website contained a detailed whitepaper with a roadmap, the team’s developers had listed their LinkedIn profiles, and people on social media would post pictures of Prodeum's name written on their bodies.How could this go wrong? Well, the moment after the bags got filled with the Ethereum equivalent of $11 million, the website disappeared and left the project’s investors a wise message, which plainly said "penis".

Any link related to the developers had disappeared, and one of the alleged team members who got caught claimed to have been subjected to identity theft. So if it wasn't him, then who pulled out this scheme?Also, what about the Twitter believers who kept on posting pictures of their bodies labeled with the Prodeum brand? It turned out that they were just paid Fiverr users who were fulfilling the assignment for which they were getting paid. Now that's quite a fruitful collaboration.

4. The Obvious PonziCoin

If Dogecoin (DOGE) turned a meme into one of the most successful cryptocurrencies on the market, then why not push the envelope a little farther and pull off an exit scheme without even bothering to hide your intentions?

If Bitcoin and its many clones promised to create a fairer and more transparent world of finances, then why not make scams more obvious too? Some guy named Josh Cincinatti thought about a concept which openly mocks the entire ICO culture, but still demands for money in a serious way. His project isn't a pamphlet of the likes of Voltaire, but a real ICO which has open and brilliant rules: first of all, it never ends. Crypto investors often regret missing deadlines and those who organize exit schemes can't possibly miss their money.

Secondly, the entire pyramid is simplified so that only the selected board of elites gets that fat percentage. It also consists of one person, as Josh Cincinatti does everything in his company. It's ridiculous, it's hilarious, and it's the ICO equivalent of the guy who did a Kickstarter to ask for money just to never work a day in his life - except that it features a profound understanding of Ponzi economics and has an amusing whitepaper.

5. Benebit

If all the other examples were sketchy and contained small clues about the scammy nature of their projects, this one is of a different kind. Ironically, Benebit was all about customer royalty and promised to unite all the cards and programs under one blockchain umbrella.

 Do you go often to have meals at your favorite restaurant which has a benefit card? Do you buy medicines from that pharmacy which offers special discounts during the winter season for customers who want flu pills? Why carry multiple cards and make use of many separate platforms when there could be one to unify them all and provide a fast and reliable payment currency?

The project sounded great and had about 9,000 Telegram members. People seemed to be excited about the upcoming launch and the developers seemed legitimate: they provided LinkedIn profiles, passport pictures, and a whitepaper which seemed both brilliant and feasible.

 Even ICO Bench gave the project a rating of 4.1 out of 5, only to quickly remove it as soon as it turned out to be a scam! And yes, I've spoiled the outcome: Benebit turned out to be a brilliantly-orchestrated scam and the founders had closed down the website and everything in less than a day, leaving behind a Telegram group where people were distributing dank memes and suicide prevention numbers.

Benebit simply proved that you can never be too certain about ICOs and even the self-proclaimed experts and evaluators from the field can get fooled (or bribed). And while the tone of this article had been pretty humorous, losing money is no laughing matter.

Only invest in ICOs if you're ready to have a nasty surprise and simultaneously feel convinced that you've discovered a true gem. Scams have become pretty elaborate these days and people seem to throw their ETH coins irrationally in all directions, hoping that they will find a gold mine. Just buying Bitcoin at a low price and HODLing it for a few months is a much safer investment option in this space, but then again it's your money and you know best how you should be spending it.

Then again, this article is purely informative, and doesn't endorse any type of investment. You have to keep in mind that cryptocurrencies are risky and I am not a financial advisor (as a matter of fact, I've had my share of poor choices so I wouldn't tell anyone how to invest their money).

How Crypto's Falling Prices Could Finally Shift the Spotlight Toward dApps

It has been a wild ride for blockchain and cryptocurrencies. So far this year, the market saw crypto prices rise to all-time highs only to fall again to the pre-frenzy levels of 2017. Just recently, the market has taken yet another hit as Bitcoin dropped below the $5,000 mark after trading stably above it for several months. Other coins like ether, XRP, and bitcoin xash also suffered double-digit dives, collectively wiping more than 15 percent off the market’s total value.


Speculators and investors are expectedly shaken up since price fluctuations were thought to be easing as of late. It’s only natural for fear, uncertainty, and doubt (FUD) to intensify during such trying times and a number of participants may even cut their losses and bail.

But falling prices may have deeper implications beyond crypto trading. Crypto supporters will definitely be looking for safer bets but rather than abandon the space, those who still believe in the key strengths of blockchain could turn their attention towards the practical applications of the technology in the form of platforms and decentralized applications (dapps).

Dapps Need a Break

Adoption of dApps has been particularly slow even though many blockchain ventures saw their utility token supplies sell out during their initial coin offerings (ICOs). Figures from DappRadar show that dapps and services built on Ethereum only have a few thousand users daily. Many dapps with use cases outside cryptocurrency trading even show little to no activity. Most of the utility tokens in circulation have been used primarily for trading rather than for dapp transactions.

Image Source: DappRadar

Most dapps have presented themselves as rivals to many mainstream apps and services but certain factors have made it difficult for ordinary users to try them out. Tse and fellow dapp developers have been working on means to make it easier for people to get into dapps.

The bear market may contribute to users’ growing aversion to crypto trading but this could prove to be the break from speculation that dapps and their developers need to become the draw of the crypto space.

Better Value in Actual Use

Volatility has been one of the key attractions of the cryptocurrencies. The potential for double-digit price swings within a day in the crypto market offers traders the opportunity to earn substantial profits quickly compared to traditional stocks. Others hold on to the tokens expecting prices to rise exponentially like Bitcoin.

But with prices continuing to drop, some tokens may offer diminished returns if used exclusively for trading. Instead of holding on to these tokens, users may actually find more value in using the tokens on their respective platforms.

Several dapps are already live so their tokens can readily be used to avail of the services they offer. For instance, users can now actually rent supercomputing power through Golem or access videos and films on Flixxo. Other post-ICO projects are also well under development.

Simplified Entry for Users

Another roadblock to dapp adoption is the complicated and costly process of actually gaining access to them. Currently, users have to go through several steps if they want to use a dapp. Most platforms require the possession of utility token so users typically have to use an exchange to acquire the required coins. If they need to access multiple dapps, they may also have to use multiple wallets to store different tokens. The transaction fees charged by exchanges also made token ownership and use quite pricey. But with prices now dropping, users may now be able to acquire more utility tokens at a bargain.

Some efforts are also considering to support the direct purchase of tokens through methods like payment cards or fund transfers. Such a mechanism would allow dapps to work like conventional apps and services where users can simply sign up and pay -- a process to which users are already accustomed.

Some platforms such as Cardstack - a blockchain orchestration platform that aims to improve the user experience for dApps - aim to make the user experience. It offers orchestration features that allow users to integrate blockchain data and services into their own workflows 

cardstack.png Source: Cardstack on Medium

Developers Encouraged to Launch

To be fair, it isn’t just the market and users that hampered the rise of dapps. Developers have also contributed to the slow adoption. Many of the projects that promised to bring about disruption in many industries have fallen short of their roadmaps. Many have yet to launch.

The blockchain-based file storage segment, for example, has become quite crowded with the likes of Storj, Sia, and Filecoin all vying for prominence. As such, they are compelled to pursue further development on their platforms to gain advantage over their competitors. Unfortunately, all this has been causing the projects delays.

Storj just recently announced that its third iteration has entered public alpha. The new version promises to deliver better capacity, functionalities, and integrations. The project’s engineering director JT Olio shares, “[The] launch of the V3 alpha for developers is a major milestone on the road to releasing the new network and the culmination of a massive amount of work from our team."

Undoubtedly, ordinary users could benefit from secure, decentralized, and affordable online storage. Such updates and news regarding developments help buoy crypto aficionados’ hopes for the projects. But since these services are yet to be made available for all, users have no choice but to stick with conventional services for now.

As more users are able to access dapps, ventures should be compelled to accelerate development. They would definitely want to take advantage of the opportunity to engage the market early and beat their competition.

Maximizing Blockchain's Potential

It’s about time for blockchain and the crypto space to start to mean more to ordinary users than just Bitcoin and cryptocurrency trading. The technology does bring potential benefits such as immutable records and secure transactions which could enhance many computing tasks.

For this to happen, blockchain must become relevant for ordinary users and dapps are in the best position to be the instrument to make this possible. Fortunately, a market that’s less interested in speculation could finally create an environment where dapps could flourish, allowing ordinary users to enjoy blockchain-based technologies in their daily lives.