Scammers are working overtime to take advantage of the still-hot ICO market creating counterfeit token sale websites that are scamming unwary investors. We talked about this briefly in our scam report, but since then, counterfeit token sale sites have become a growing threat to the integrity of the cryptocurrency ecosystem. This is a concern because it not only takes advantage of investors, but it also leaves the door open for unnecessary regulation as lawmakers seek to protect their constituents.
For ICO teams, it’s bad PR at a time when they are trying to grow their operations. They are forced to go into damage control before they even get started. Spoofing is so common now that ICO teams are taking preemptive measures. Some have designed their communication channels and processes to control their interactions with investors and participants to limit potential scams and spoof sites spinning off their work. Businesses have arisen to help protect ICO teams and their investors.
Among these is Metacert, which offers software to protect internal communications and a free Chrome extension for investors to protect themselves. But it has seen limited success. The problem persists because it’s easy for scammers to copy a landing page — which has separate coding from a more complicated website — that most ICOs use for their token sales. These landing pages are often very simple with links to team member profiles and social media accounts and to the whitepaper.
Those can be easily duplicated. In a very short time, essentially with a few clicks, a scammer can copy a whole token sale site, changing only the donation address (BTC, ETH etc.). Then they wait for free money. When a scam site is outed, the site and its associated spam accounts go dark or are deleted. Anyone can create a Twitter account for spamming, and criminals have long used Telegram and Discord for phishing. It’s relatively easy to attract enough attention to ensnare a few eager investors. And it only takes a few investors to follow through for the effort to be worthwhile for the scammers.
Currently Telegram’s ICO is experiencing a wave of such activity. As many as 10 sites have been identified as trying to scam potential buyers of Telegram’s TON token. It isn’t lost on us that Telegram’s encrypted communication platform has been one of the primary channels scammers have used to advertise fake sites and phish for victims. Now it’s biting that platform in the ass a little. It doesn’t help that Telegram has not been clear on the details of its token sale. How much money they are raising is unknown, and the Telegram team is all but silent on how they plan to use the funds they raise. This gives hucksters fertile ground for creative scamming.
Scammers can easily create legitimate looking but totally fake auxiliary sites and communication channels such as news sources and marketing channels that link to counterfeit sites.
Please look for the official channels and sites before investing in anything. Don’t make assumptions. Follow the directions of the ICO team. If they say they will use only one channel for communication, don’t pay attention to any others. Stay vigilant. The ICO market hasn’t cooled off yet. Even with eventual regulation coming, we shouldn’t expect scammers to stop trying. They’ll probably even step up their efforts to get the low-hanging fruit before regulators change the rules. Eventually this Wild West market will get a little more reasonable, especially as mass adoption of cryptocurrencies begins, but in the meantime, it’s up to you to protect yourself.
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