The rise of cryptocurrencies opened the door to innovative ways of raising capital, and Initial Coin Offerings (ICOs) quickly became one of the most popular methods. For many investors, ICOs offered a chance to get in early on the “next big thing.” But alongside legitimate projects, countless fraudulent ICOs have emerged—designed not to build technology, but to steal money.
Fake ICOs typically lure investors with bold promises, flashy websites, and aggressive marketing campaigns. Once enough funds are collected, the project disappears, leaving participants with worthless tokens and no recourse. According to multiple studies, billions of dollars have been lost to these schemes since the ICO boom of 2017, and scams continue to evolve using modern tools like artificial intelligence and event-driven hype.
This guide explains what an ICO is, how it works, real-life examples of fraud, why they are dangerous, and how you can protect yourself from becoming a victim.
What Is an ICO?
An ICO (Initial Coin Offering) is a fundraising method where blockchain projects sell their own tokens in exchange for established cryptocurrencies like Bitcoin or Ethereum.
The idea is simple: investors buy tokens early, hoping the project succeeds and the token rises in value. Unlike traditional IPOs, ICOs often launch without strict regulation, making them attractive for both innovators and scammers.
What Is a Fake ICOs?
A fake ICO is a fraudulent project that presents itself as a legitimate cryptocurrency investment opportunity but is actually designed to deceive investors and siphon funds. These scams often rely on copied whitepapers, unrealistic profit promises, aggressive marketing campaigns, and even fake celebrity endorsements to appear credible.
The biggest risk is that, unlike traditional IPOs, ICOs are rarely subject to thorough audits or strict regulations. This creates room for scammers to launch fictitious projects that vanish shortly after collecting investors’ money.
How Does a Fake ICOs Works?
An ICO typically follows a sequence of steps designed to attract investors and fund the development of a blockchain project. While the structure may look professional, it can also be easily manipulated by scammers. Here’s how it usually works:
- Whitepaper Release
The team publishes a whitepaper — a detailed document that outlines the project’s purpose, technology, roadmap, tokenomics (supply and distribution), and how the token will be used within the ecosystem.
A strong whitepaper helps build credibility, but in fake ICOs, these documents are often vague, plagiarized, or filled with unrealistic promises. - Token Creation
Using blockchain platforms like Ethereum, BNB Chain, or Solana, developers create the project’s tokens through smart contracts. These tokens represent the value investors are buying into, but they don’t guarantee any legal rights.
In scams, the code may have hidden functions that allow insiders to drain funds or block investors from selling their tokens - Marketing and Hype
Next comes a heavy marketing campaign. Projects flood social media, Telegram groups, Reddit, and Twitter/X with promises of huge returns. Influencers or even celebrities may be paid to endorse the project.
In legitimate ICOs, this stage builds awareness. In fraudulent ones, the hype is used to pressure investors into sending money quickly before doing proper research. - Token Sale (Crowdsale)
Investors are invited to send established cryptocurrencies (like ETH or BTC) to the project’s wallet address in exchange for the new tokens. The sale is often divided into stages (private sale, pre-sale, public sale) with discounted prices to create urgency.
For scams, this is usually the endgame — once enough funds are collected, the team may vanish. - Exchange Listing (Optional)
If the project gains traction, tokens may be listed on crypto exchanges where they can be traded. This increases liquidity and visibility.
However, many fake ICOs never make it this far, or they arrange listings on small, low-quality exchanges just to appear legitimate before executing a pump-and-dump.
While some ICOs have successfully launched real products (e.g., Ethereum itself started with an ICO in 2014), many others shut down or disappear after raising funds, leaving investors with tokens that have no real value.
Real-Life Examples of Fake ICOs
The history of ICOs is filled with both legitimate projects and outright scams. Below are some of the most infamous cases that reveal how far fraudsters will go to exploit investor trust:
Centra Tech (2017)
Centra Tech promised to launch a crypto debit card supposedly backed by Visa and Mastercard. With high-profile endorsements from celebrities like Floyd Mayweather and DJ Khaled, the project raised over USD 25 million during its ICO. However, investigations revealed that the partnerships were fabricated and the business model was misleading. The U.S. Securities and Exchange Commission (SEC) charged the founders with fraud, and investors lost millions. This case became a landmark example of how celebrity hype can be weaponized in fake ICOs.
Prodeum (2018)
Prodeum marketed itself as a project to revolutionize produce tracking through blockchain technology. Its ICO went live with bold promises, but within just a few days, the project disappeared. The website was replaced with a single trolling word leaving investors empty-handed. Though the amount stolen was relatively small compared to larger scams, Prodeum demonstrated how low-effort frauds could still deceive unsuspecting investors.
2024 Olympic-Themed ICO Scams
Ahead of the Paris 2024 Olympics, cybersecurity researchers at Trend Micro uncovered a wave of fraudulent ICOs leveraging AI-generated promotional material and Olympic branding. These scams created professional-looking websites, fake roadmaps, and social media buzz to lure investors. Victims were tricked into sending funds to addresses controlled by scammers, with no real project behind the campaigns. This case highlighted how modern scams are becoming increasingly sophisticated, blending cutting-edge AI tools with major global events to appear credible.
These examples highlight how scams evolve, from crude websites to sophisticated campaigns with global marketing.
Why Fake ICOs Are Dangerous
According to Chainalysis, crypto scams surpassed USD 9.9 billion in 2024, with ICO-style offerings still among the most common fraud tactics. Fraud campaigns are shorter, more sophisticated, and often use AI-generated websites, fake endorsements, and high-pressure marketing to trick newcomers.
Here are the main dangers:
- Lack of regulation → most ICOs operate outside financial oversight.
- Anonymous founders → scammers often hide behind fake LinkedIn profiles or pseudonyms.
- Unrealistic promises → phrases like “guaranteed profits” or “100x returns” are classic red flags.
- Pump-and-dump schemes → insiders pump the token price, then dump on retail investors.
- No fund recovery → blockchain transactions are irreversible, making restitution almost impossible.
According to studies, more than 50% of ICOs during the 2017–2018 boom were scams, costing investors billions of dollars. Even in 2024, fake token sales remain a common tactic in global crypto fraud.
Fake ICOs vs Other Crypto Scams
While ICO scams are among the most infamous in crypto history, they are far from the only way fraudsters trick investors. Understanding how ICO fraud compares to other common scams can help you spot red flags across the entire crypto ecosystem.
Key Comparisons
| Scam Type | How It Works | Similarities with ICO Scams | Key Differences |
| Rug Pull | Developers launch a token or DeFi project, attract liquidity, then withdraw all funds. | Anonymous teams, no audits, sudden disappearance. | Happens after launch, often in DeFi liquidity pools. |
| Ponzi Scheme | Promises high returns, pays early investors with funds from new investors. | Relies on unrealistic profits and constant new investment. | Not token-specific; based on ongoing payouts instead of token sales. |
| Pump-and-Dump | Insiders hype a token, artificially inflate price, then sell at peak. | Heavy marketing, celebrity endorsements, FOMO tactics. | Short-term market manipulation instead of a fake project. |
How to Protect Yourself from a Fake ICOs
The promise of quick profits and groundbreaking technology makes ICOs tempting, but that same excitement is exactly what scammers exploit. Protecting yourself starts with a healthy dose of skepticism and a clear process for evaluating any new project.
Ask yourself key questions before sending funds:
- Who is behind the project? Are the founders and developers real, experienced, and transparent?
- Is the whitepaper credible? Does it provide technical detail, or is it filled with vague promises?
- Where’s the code? Legitimate projects often have open-source repositories and active development.
- Has the token been audited? Independent security audits are a sign of professionalism.
- What’s the roadmap? Be cautious of projects that only emphasize price growth and ignore product delivery.
What to Do If You Become a Victim
- Stop sending funds immediately.
- Collect evidence – screenshots of the website, wallet addresses, and communications.
- Report the scam to regulators, law enforcement, or crypto fraud hotlines.
- Warn others on crypto communities (Reddit, Twitter/X, Telegram) to prevent more victims.
- Seek legal advice – while recovery is difficult, some cases (like Centra Tech) have led to partial restitution.
How to Stay Safe from Fake ICOs
Fake ICOs are one of the most common scams in crypto, and they’re becoming harder to spot. The good news? With a few simple precautions—like researching the team, verifying audits, and avoiding projects that promise guaranteed returns—you can greatly reduce your risk.
Remember: investing safely is a habit, not a one-time action. Always double-check project details, stay updated on new fraud tactics, and use trusted wallets for your transactions. That way, you’ll stay one step ahead of ICO scammers.
Now it’s your turn—before putting money into any project, take a few minutes to research the team, the technology, and the tokenomics.
Pro tip: Always store your crypto in a non-custodial wallet, where only you hold the private keys. Solutions like the Klever Wallet let you keep full control of your assets while supporting a wide range of blockchains and tokens. That way, even if you buy into a legitimate project, your funds remain secure and accessible at all times.
Stay safe, stay Klever.
