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It has been reported that up to 80% of advertised ICOs turn out to be scams. So, how do investors, especially those who are new to investing or new to cryptocurrency, know how to avoid falling into the hands of these scammers? (source: https://cointelegraph.com/news/new-study-says-80-percent-of-icos-conducted-in-2017-were-scams)

Listed below are 3 suggested (but not exhaustive) steps that one can take before making an investment. Hopefully, this will help many of you avoid being scammed.


1. Do your background research:

Whitepaper: If you ever think of investing into an ICO, make sure you make your proper due diligence into different areas. Firstly, read thoroughly through the Whitepaper to understand how strong is the company's business proposition. It should be clear and concise with information to the goals, how these will be attained, the timeline, the funding model and token sale to name the most important. If the Whitepaper does not have much to do with the project's main idea, seems vague and poorly thought out with more emphasis on explaining blockchain related concepts, then know that these can be possible signs of fraud. On the contrary, sometimes the Whitepaper can seem utterly well written and refined, but when you look deeper, you will realise that the idea is likely to fail and can hardly be carried out. Additionally, it is always an option to examine the Whitepapers of some of the legitimate ICOs as a point of comparison to the Whitepaper in question (e.g. the level of detail, clarity, topics covered etc.). Any mention of 'guaranteed returns' or specifications of what returns you will get on an investment are big warning signs. In other words, any business idea that puts emphasis on the monetary incentive over and above communicating the strength of the business idea is certainly suspicious.

Website: Check if the website gives a clear idea about the core of the project. When a website is looking polished and clean, it is a good sign, but note that even scammers can spend money into great looking websites. So, the key is to examine the quality content provided besides the Whitepaper, such as links to a blog, press materials, videos presenting the team etc.

The team: Check the identity and experience of everyone who is involved in the project team, including the developers, and cross check if their identities are verified elsewhere, like in LinkedIn. Examine if the team's background makes sense and adds value to the project. Some scammers use the name of famous blockchain experts as advisors or team members, but these claims are actually fraudulent. Hence, always check the veracity of such claims.


2. Stay suspicious:

Before investing into an ICO, take a 'guilty until proven innocent' stance. Don't make any assumptions that a project seems legitimate or sound. Make your research and if something seems off, investigate every inch out of it. For example, you can join the Telegram group, where the ICO has their active community, and ask your questions there. Examine the genuineness of the response you receive.


3. Check rating sites: There are a number of independent sites (e.g. ICObench, ICORating, FoundICO etc.) that help investors to check how legitimate are upcoming ICOs. Some of them give a rating based on the various factors, such as business idea, team or finance model. Other sites help to call out scammy ICOs, such as ICO Alert. We cannot take the information provided on these sites for granted, but it may be worthwhile to see what is their point of view on the project in question. Additionally, it is always an option to check what experts on crypto-related forums online say (e.g. Reddit) about a prospective investment.

Even the most experienced of investors could fall victim to ICO scam.
There are different tactics and approaches the underhanded developers take to make their project look legitimate.
I personally shy away from projects with no pre existing structure. It's not a sure sign of scam but it raises a red flag. And I know all what they have to offer are promises.

IMO rating sites are not worth to trust.
OP seems that you put your effort into your post, keep trying.
Here are some good tips for you in ICO world by Coolcryptovator (https://bitcointalk.org/index.php?action=profile;u=1980983)

Guidelines, how to spot a scam ICO & report effectively. ✔ (https://bitcointalk.org/index.php?topic=5004397.0)

Find the scam ICO list here (https://bitcointalk.org/index.php?topic=5053066.0) and  here (https://bitcointalk.org/index.php?board=83.0), some are active with token sale, maby you find ICO which you intend to invest  ;D

Also, avoid the hype. Many people are just shilling or hyping that ICO or coin. Do your own research and never rely on other's opinion.

A warning to everyone especially newbies, dont fall for twitter crypto giveaways scam. Never fall scam for someone promising you lots of crypto when you send him your coins. NEVER
It still shocked me how people fall for this

Isn't it the best way to avoid scam is not to invest in ICO because majority of them are fraud? I guess that the best way for you not to be another victim of this stunt. In this market, if you don't used your common sense chances are you're going to lost a lot of money here.

Just don't invest to any suspicious(ICO) investment that you are seeing nowadays except buying and trading on exchanges or investing to casino's bankroll's. Those ICO rating sites can't be trust too, they are offering paid review.

So what if you fall to an ICO that just paid good reviews, whether to those ICO rating sites, blogs, mediums and other sites that they can publish their ICO. This is happening so it's not enough to trust those rating sites.

we may take other's review or comments about an ICO as an reference when you encounter a new ICO project or you are even a newbie to the market, before you started any participation you should be having enough observation, for example like knowing why the recent ICO would have gone might due to stricter regulations as every countries are emphasising or giving out outline or regulations in ICO projects or crypto-market at the moment.
Never forget to check out the news daily

I have saved my thousands of dollars just because I did adequate research before investing. As it is recommended multiple times, one should invest his time before investing his money. Generally, when the scammers are attacking, they prefer newbies as newbies won't spend much time on thinking and doing the research but they invest recklessly trusting the commitments made by the scammers.

I don't think that we can believe in rating sites. Some sites are not trustworthy. You should be careful.

yes, that is also the reason why we always have to stay alert and do our own research before investing.

Yes, you're right but we still want to make profit with it and don't know how to avoid ICO scam.

Is there any trustworthy site review about new ICO?

Rating sites just sell premium rating, and there is nothing to trust.  ::)

There's no clear easy way to avoid scam in the crypto industry.  There will always be a time where you're investment looks like a scam.  The best way is to research first before you invest and prolly just trust the top 10 or up to top 20 coins.  ;D ;D

I agree to your last point regarding ICO rating sites when you say everyone should trade the ratings with caution. Many ICOs pay these rating sites for good reviews, even if the project is very poor the rating won't show it. There were many cases in the past and it's likely the shitshow will go on for a while.
Sometimes ICOs are just a better gambling on a higher level.

Also reviews of crypto YouTubers like Suppoman or Ian Balina should be traded with caution. Keep in mind they get paid for the review and the informations you'll get there are very biased.

Try and learn about how the industry works and research reviews.  For me, just invest in the top 10 coins  8) 8)

Thank you for providing tips and details, it is best to stay on the safe side.

Do your own independent research, use many different information resources, and f something sounds too good to be true, then run. 

 The post has definitely mentioned the basic research and understanding but you should be aware of the advertisement or promotion, be super careful and do not let yourself fall into the trap easily whenever you see some advertisement or attractive posts  with any reward.

Before investing in any projects you should be knowing about the project. And you have to be very careful while dealing in the market.
while your are ready to invest you have to check out the background and read the whitepaper of the project.

we must be knowledgeable to judge scams , or see other falling into scams and learn from there experience dont just get greedy and fall for scams first do research and see the actions going on   

It such a sad situation that we have in crypto these days and i believe that if most people are to take certain things seriously and conduct research into their investments they would not fall prey to such schemes.

Avoid being greedy and you no scamming schemes can elude you. it is the greed of investors that makes them fall prey to the schemes of scammers. Nonetheless the information that OP has shared here is very resourceful and i believe it would really enlighten other new members to stay off their schemes.

At the first of your suggest, i think you can add Social Media/Official Fanspage. This is for see a news about that project. This project is good if it has Reddit,Linkedin,and Medium. Its will good too if that team of project has Sosial Media Account too.

The fact that an ICO has a set of social media channels in play is no indication as to whether the ICO can turn out to be a scam. Perhaps the content they feed may hint to some fishy things going on, but the channels per-se do not serve to discriminate scam from non-scam ICOs really.

Oh sorry, i mean this social media is real and that post is real about their project. I see more scam project is only share crypto news from cointelegraph or anything website that share  about crypto

Do your own independent research, use many different information resources, and if something sounds too good to be true - so just go ahead :)

Before making the investment you have to survey the project which you are going to invest.
You have to read their whitepaper and should be knowing about the community well and good.

Can anyone suggest how can we differentiate the ICO rating website are worthy, that is better to take it as a reference website to understand and learn more?

The sad fact is most of them are paid to give good ratings to these ICOs. Don't trust any of them and have your own basis as for checking what ICO to invest. But it's better if you'll just stop investing to these ICOs.

Every reference can be paid, good or bad review so if its for your own decision making be cautious for every possibility. Start looking for other legit investment vehicle instead of ICOs now. They are the same in schemes and ideas nowadays.

There is already a ready skam-checkers, that allow to collect all the above information and doing an activity analysis ICO in social media https://cryptomado.com/ico/

Scammers can now deceive you in the most sophisticated way, in spite of experience and knowledge, everyone can get caught in all sorts of traps.

Good tips for new members, I know these from my own bad experience. Invested in almost the shittiest projects of them just because of the hype during 2017 xD

Avoiding scam project is more than just reading white paper
A scam project can even have a better white paper than that of a real project well there is no best way to avoid scam project
But one important way is to deal with reputable project manager although this is not completely sure but it's a bit ok

Those were just some of the factors to consider, thanks for sharing OP, I hope somehow this helps the newbie who wants to enter the market.
No. 2 which is Stay suspicious: is very important, with the fact that you presented that 80% of ICO are scams, you should be suspicious all the time.

Thanks guys. I really hope this will help anyone who is new to this.

Although it is difficult to distinguish between legit and scam projects, but there are many ways to at least reduce for we to choosing a project scam, including those written by the OP. I think ICO investors are very brave, they can save their money without knowing the future of the project. Like we lend money without knowing who the borrower is. So think again for you when you decide to invest in ICO, indeed when the project is legit, you will get multiple benefits, but if it's not a legit project then your money is not left at all.

In short it is very difficult to spot a scam projects. There are only few projects here that are really worth it to invest and others are just like a good for nothing crowd funding projects. Anyway, I have read somewhere of a post that related to the new system of crowd funding activity from ICO to STO (Security Token Offering). The post indicated that the STO projects are registered as a requirement from the government for the project to proceed and promote the crowd funding activity. Though I have not read any article that support it but it may be good if we can see more STO projects in the altcoins section.

STO projects will  be the best project to join with and investors will not be having more difficulties to spot and do diligent research to identify scam projects.