At Malwarebytes, we feel we have reached a point where we need to ask our customers how to proceed on the subject of ICO scams. Asking for your opinion may seem strange to some of you, but Malwarebytes comes from a community of mutual help and trust. If you were unaware of this, reading how our CEO got involved in the anti-malware business is a good way to get acquainted with the cornerstones this company was built on.
To elaborate on what we need your help with, we will need to explain a bit of the background, so bear with us.
What is an ICO?
ICO is short for Initial Coin Offering, which is, in fact, a method of crowdfunding, used for many crypto-related projects. The founders of a new company offer shares of their own blockchain-product for sale in exchange for established crypto-currencies like Bitcoin, Ether, or Monero. With the funds they gather the capital to get their company up and running. Once the company is successful the “coins” bought by the investors will be worth more than what they bought them for.
That is how it should go, but what we see over and over is that the people that initiated the crowd-funding, grab the investments and are never to be heard from again. Or we will see them at a later time, under a different name, repeating the same procedure. Some of these imposters are using templates that they re-use for every fake ICO. These templates are for:
- Creating an account at the Ethereum blockchain
- The packet script for the blockchain
- The sites to promote their new product
- Advertising campaigns to get people to visit that site
- Accounts on bitcoin-related forums to promote the ICO
- The whitepapers explaining the goals and targets
To put this into perspective, it might also be good to mention that a recent study showed that only 8% of ICO’s managed to trade on an exchange. So, even if we only consider 80% of them to be a scam, the chances of investors losing their money are much bigger.
How to spot ICO’s that might be fraudulent?
There are a few methods you can use to decide for yourself whether an ICO is worth your hard earned money:
- Do the people behind the ICO actually exist?
- Does the plan they have make sense?
- Is the earning model realistic?
- Does the team behind the ICO answer questions about their plans?
- How far are they in the development of their currency, do they have safe wallets etc.?
- Do they stipulate that US participants need to be accredited investors?
The problem at hand
We have been seeing a lot of ICO’s that are nothing short of scams. And we would like to protect our customers against them. But, if we wait until we can prove that they are a scam, it’s probably too late and the crooks have run off with the investments. So we would need to be more pro-active.
Are we alone in this battle? We certainly are not.
- US Security regulations are so strict that most legitimate ICOs explicitly ban U.S. investors.
- Google blocks ICO advertisements since June of 2018.
- Bing blocks Cryptocurrency and ICO advertisements since July of 2018.
- And so does Facebook since January of 2018.
What do we ask of you?
Please let us know in the comments section below this post whether you feel we should block ICO advertisements, all ICO related sites, or leave it up to our customers to decide for themselves.
Please take note that users of our Chrome or Firefox extensions may already see some of the sites being blocked. This is because the extensions are behavioral based and may have spotted a scam for you.
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