Are you investing in a scam?

One day as you are scrolling through twitter or telegram, you hear about a revolutionary project that sounds a little too good to be true. How do you know if it is a scam or not?

That is why we compiled this checklist of tools and questions to ask yourself to help inform your decisions.

1. Who is behind the project?

The first and easiest action to take when researching any project is to find out who is behind it. Look to see if the team is public and if so what are team members their experience? An excellent resource for gather team profiles is LinkedIn and Github. LinkedIn is good for the core founding team and Github is good for the developers. Here are some red flags to look out on LikedIn:

  • Are the profiles empty and hastily constructed?
  • How experienced are the team members in their field?
  • What is the ratio from technical to non-technical people?

On Github

  • What other projects have the developers contributed to?
  • How recently have they pushed changes to the project?
  • Are they active or in-active?

2. Is the project promising ridiculous returns?

A classic sign of a ponzi scheme is if high returns are promised. To understand how high is too high of returns, look at the context of the project and the industry at large. You can compare promised returns from crypto to traditional finance. For example would you trust a hedge fund if it was promising 1% weekly returns?

3. Does it pass the whitepaper check?

As someone who has read his fair share of whitepapers, I get it. Reading a whitepaper is tedious hard work. However, some of the best insights can be gained through a thorough study of the whitepapers contents. Here is a list of what to look out for:

  • Does the whitepaper have a lot of jargon?
  • Is it written for a technical audience or a consumer audience? In layman's terms, does it have math formulas and complex diagrams or are there infographics and pretty colors?
  • Does it explain the underlying technology or make broad promises? Is the goal of the paper to explain the technical how of the project or does it simply make big promises for what it will deliver?

4. What are people critical of the project saying?

To get the best feedback on any project (including established ones like Bitcoin) there is no better source for understanding its drawbacks than what the people who are critical of it are saying. Harness the power of social media to see what the critics are saying.


Search the project name and see what results pop up. Look for any negative posts or comments.

See what the project reddit channel is saying


Look up the project's main tweets, who is commenting/RT. What are the project "haters" saying?


Search for keywords such as, "is X a scam?", "issues with X project", "can I trust X project"

5. How is the token distributed?

Understanding who owns how much of the token is vital to understanding what the stakes are. If the owners/early investors have many of the early tokens, then they have a large incentive to cash out as quickly as possible. An excellent tool for discovering token distribution is Etherscan. Here is what you want to look for:

  • What percent of the tokens do the founders have compared to everyone else?
  • What is the history of the token? Has it been distributed or always centralized

6. How are the tokenomics structured?

In the whitepaper when the founders are talking about token distribution/allocation, they typically paint a rose-colored vision of what they want the reader to think. Something along the lines of "fair and equal distribution". However, it is important to understand exactly what the actual tokenomics of the project are. For example:

  • Does it have long lockup periods for tokens?
  • How easy is it for the owners to cash out?
  • What are the discrepancies between what the whitepaper says and what is actually produced

With this checklist in hand you are now able to tackle any project and come to a conclusion on if they are scamming you or not.

What questions do you ask yourself when evaluating a project?