Where money flows, scammers are bound to flock. This is true in the cryptosphere as well, especially when it comes to ICOs. The most successful ICOs attract a variety of hackers and scammers that use a variety of tactics to steal money from unaware investors. Hydrominer, a green mining project located in the Alpine region of Europe, has released a recent statement advising investors to be careful.
In the blog post, HydroMiner spells out various types of scams that can be used to deceive ICO investors. One of the most common ones being fake ICO or phishing websites. In this case, fraudsters try to get investors to send funds to their wallet by creating a website that looks exactly the same as the ICO website of the project at hand.
HydroMiner advises users to be vigilant and to verify the address of the website and make sure it is correct or even enter it manually for extra security. You can also use a browser extension, like EtherAddressLookup, that blocks blacklisted websites, to ensure you don’t navigate towards one of these traps by accident.
According to HydroMiner, social media and messaging apps are also a common place for hackers. These will either send one of the aforementioned fake ICO websites or they will send a wallet address directly. The post reads:
“Slack and Telegram messaging are often used by scammers these days, so be extremely skeptical of the messages from unknown senders or somebody claiming to be a member of the HydroMiner team asking you to send any funds to an address provided in the message.”
Previous ICO Scams & Hacks
The Enigma hack was an example of that, where hackers were able to steal 1,500 Ether by getting access to the CEO’s email and altering the website, informing users that the ICO was starting before the scheduled date. The hacker was also able to get access to the Slack group and scam further users, so a good strategy is to be suspicious of any links or received via email or Slack and Telegram messages, as they might be a scam or phishing website.
Other hacks are almost impossible to be avoided, like the CoinDash hack. Exactly 13 minutes after the started of the ICO, the hacker was able to get access to the official website of the ICO. Changing the wallet address, he was able to get away with, what was then, $7 million worth of Ethereum.
Knowledge is power
With the rapid expansion of crowdfunding through ICOs, many new investors are making their way into the crypto space without much knowledge of cryptocurrencies or decentralized ledger technologies. Jordan Belfort, the real “Wolf of Wall Street”, says that there is too much money being funneled into crypto token market. Comparing it to that to the 1970s “blind pools”, where brokerages raised funds from investors that were not informed on how the money would be spent, he said that ICOs will “blow up in people’s faces”.
Even if his prediction is not fulfilled, the market is indeed being flooded by too many ICOs and being informed about the project you’re investing is vital. To learn how to avoid scammy ICOs, read this guide by CryptoCompare.