ICO Scams Are Killing Us
The ArcBlock ICO token sale finished in minutes, but scammers still managed to grab a few victims. I observed another scammer fest in the ArcBlock ICO token sale.
The token sale process officially started on Feb 3, at 19:00 CST but in the lead up to the actual start of the sale, scammers were already moving to take advantage by sowing confusion and laying traps knowing full well that a massive crowd of 58K Telegram members eagerly waiting with ETHs at the ready.
Scam before
Shortly before the official start time of the token sale, the scammers already started to sow the seeds of confusion by posting messages on the Telegram channel like these:
Due to unforeseen circumstances... send your ETHs to this address instead...
Scam during and after
Many of these kinds of scam messages continued to be posted during and even after the sale had reached its hard cap for both Ethereum (12,500) and CyberMiles (6,000,000). The actual token sale was over in minutes, but of course people are desperate to get in and if they were unsuccessful the first time and then they see a message which sort of looks legit and offers them another chance, no wonder some people went for it.
Unfortunately, some unsuspecting folks had fallen for these scam posts and have lost some ETH in this process. The only good thing is not too much ETH have been lost to the scammers.
These three wallets are the ones used for some of the scam messages on the Arcblock Telegram channel.
You can check them to see how much ETH was sent to these addresses.
- https://etherscan.io/address/0xeD00B7435CDA2dfe32bA0D22fDf9AE302DEb5AfA
- https://etherscan.io/address/0xE43b27908650741c5ef0502fF2758DDf036c44d6
- https://etherscan.io/address/0x3Deedfb93724ae7E2d394883343A127b4ce2EE43
Bee Hive ICO Smash and Grab
This small loss of investor funds to scammers is really fortunate and is in sharp contrast to the jackpot that the scammers pulled on Bee Token ICO scam which I wrote about a few days ago, which had scammed over $200K in ETH from investors.
ICOs are a risky game, are they still worth it?
As if investing in ICOs is not already risky enough, the scammers are really adding another big layer of risk to the process.
As an investor, not only are you at risk of losing your investment due to project failure. Scam projects (Confido and many many others) may run off with funds after completing the ICO. You could lose your funds to fake ICO contribution wallet scams such as seen in the ArcBlock ICO and the Bee Token ICO and the Enigma ICO.
These fake wallet scams are pretty much happening on all ICOs especially the hyped ones. Here's a few quick tips when taking part in ICOs:
- ICO investors need to be very careful and avoid sending ETHs to any unknown addresses.
- Check and double check given ETH addresses (I know you don't have much time when competing against 1000's of other people but sometimes you are better off missing the ICO than losing a few ETHs to a scammer)
- Always read the instructions from the official sources very carefully.
- When in apps like Telegram, check for the pinned messages from the official channel admin(s) who's avatar will have the word "admin" beside them such as this one.
- Watch out for fake emails/messages claiming to be from the ICO team informing you of last minute changes.
It will be a while till the smoke clears, thanks for the heads up!
You're welcome buddy.
Unfortunately, doing ICOs is like being in the wilderbeest migration.... some victims will get pulled down by the crocs or lions when cross the river.
Coins mentioned in post:
Its absolutely ridiculous that people are falling for this. I'm noticing the same pattern in every single telegram group. Not a day passes without me getting a "privileged presale offer" through pm by folks masquerading as an admins of these ICO groups. I'm not sure how to fix it though.
Thanks @magpielover for your comments and it's good to hear from a admin for one of these groups to get your perspective on things. I don't doubt you guys have a difficult job to do without these scammers making things harder.
I've seen people a lot of people say these chat services like Telegram/Discord and so forth are good for support, but to be honest I think they are only good for the companies who have none or very limited resources for user support. The user experience is never great with these systems. Take for example, when you have thousands of users online at the same time, such as hours/minutes from the start of an ICO. Hundreds of messages get posted every minute. It's pretty much impossible to read any messages during this time. The only way to get a message across is for the admins to pin messages.
TBH, I think solving the issue of ICO scammers, requires a multi-pronged approach. But just on the social channel like Telegram, there's a few things that could be done to reduce the opportunity for scammers. Here's a few things I think could be done to improve things.
Only allow admins to post to Telegram channels during ICO
I've seen some admins freeze the group just before a token sale until it is concluded. Not sure if it's possible to ONLY allow admins to post in a Telegram channel, but on the lead up to and during a token sale, like a 4-6 hours before, it might be a good idea to lock down the channel until the sale has concluded (for the red hot ones anyways that sell out in minutes or hours). Obviously for sales that will run for days, this is not practical.
Stop leaving important details till last minute
Part of the problem I see is that teams leave the important details until the very last minute. Important details like individual caps, gas limits and gas prices and contract addresses are often only shown last minute leaving a lot of people in panic mode. When you have panic and confusion, it makes it easy for scammers to strike. Best to communicate important details early and in a controlled manner so everybody can be prepared and ready.
You don't have to show the full contract address, just show the last 4 digits or something like that. They could consider using services like Clearify to help identify legit contract addresses.
Allocate more for the public sale
Instead of allocating a large chunk of the tokens to the presale/private sale whales who number in the few and are probably already rich, teams can try allocate a higher proportion to the main sale so that there is more to share between the masses. This will avoid the fiasco that we saw recently with the WePower and Bee Token token sales where main sake participants had ridiculous caps of 0.1 ETH to begin.
Limit the size of the whitelist pool
Don't over subscribe the whitelist by a huge margin. Sure I understand that not everybody the joins the whitelist will end up sending funds but surely a large portion of them will. Again, pointing to Bee Token and WePower, those were two that were clearly massively oversubscribed which led to ridiculous individual caps.