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1Scan for outdated or missing drivers - takes under a minute2Repair Windows errors before they cause bigger problems3Fix the driver behind crashes, sound loss and screen glitchesAn ICO’s website, white paper, exchange listing or celebrity endorsement cannot establish that the offering is honest. You can, however, check who is behind it, what the token actually gives you, whether the claims trace to evidence, and whether the offer fits the rules where you live. A failure on any of these checks is a reason to stop, and a pitch that promises guaranteed returns or pushes you to act quickly should end your evaluation on its own. Initial coin offerings are highly speculative, and losing the entire amount you put in is a realistic outcome.
This guide draws on the SEC’s “Investor Bulletin: Initial Coin Offerings” (July 25, 2017), the FCA’s consumer page “Initial Coin Offerings” (first published September 12, 2017, last updated February 27, 2019), the FTC’s consumer advice “What To Know About Cryptocurrency and Scams,” and the SEC’s small-business explainer “Transactions Involving Crypto Assets” (April 22, 2026, last reviewed April 29, 2026). The 2017 and 2019 pages are several years old, so confirm their specifics against each regulator’s current website before relying on them.
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What an ICO can and cannot prove
Regulators make the same point about presentation. The SEC’s investor bulletin warns: “it is relatively easy for anyone to use blockchain technology to create an ICO that looks impressive, even though it might actually be a scam.” A polished site and a detailed white paper tell you about the marketing budget and the writing team, not about the issuer’s intentions.
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No regulator guidance cited here gives a reliable share of ICOs that turn out to be scams, so no percentage is offered in this article, and an anecdotal enforcement case should not be read as a measure of how common fraud is. What regulators do say is that ICOs carry serious risk. The FCA describes them as very high-risk, speculative investments, often at an early stage. The SEC notes that recovering lost or stolen crypto assets may be difficult.
A six-step check before you send funds
Work through these steps in order. Each one can end the evaluation, and none of them certifies an offering on its own.
Step 1: Pause before you send anything
Treat unsolicited offers, countdown timers, “limited allocation” wording, and instructions to act before you have checked the details as reasons to slow down. The point of the pause is to create time for steps 2 through 6, which pressure is designed to prevent.
Step 2: Identify the actual issuer and promoters
Confirm the legal names of the company and the individuals, where they are located, their track record, and any professional status they claim, using independent sources rather than the project’s own materials. Then search the issuer’s or person’s name, and the token’s name, alongside words such as “review,” “scam,” or “complaint.” Testimonials and the project’s website are not substitutes for this search.
- U.S. registration statements: search SEC.gov/EDGAR.
- Professional backgrounds: check Investor.gov.
- Licensing: use the official registration or licensing tools of the regulator in the jurisdiction where the offer is made and where you live.
Impersonation is common. The FTC warns that scammers announce fake tokens in the names of real companies. Confirm any token announcement through official company channels that you reach yourself, not through links supplied in the announcement.
Step 3: Read what the token gives you
The offering documents should state, concretely:
- what rights the token provides, and whether it carries any claim on the project’s revenue or assets;
- who owes any promised performance, and what they are obliged to deliver;
- how the money raised is intended to be used;
- whether a refund or return is possible, and under what conditions;
- whether resale is restricted, and the project’s current stage.
Compare these descriptions with project information you can verify independently. If the explanations are vague or contradict each other, stop and take qualified advice before going further. The existence of a white paper proves very little, because a white paper can be unbalanced, incomplete, or misleading.
Step 4: Test technical claims against evidence
The SEC’s bulletin suggests asking three questions: whether the blockchain is open and public, whether the code is published, and whether an independent cybersecurity audit exists. In practice, check the following:
- Is there a working or demonstrable product, not only a roadmap?
- If the code is said to be public, can you find it and see what it does?
- Does the named auditor exist, and does the report exist and cover the relevant code and version? Verifying this is practical guidance rather than a regulator requirement.
An audit addresses technical risk only. It does not verify the business plan, token economics, legal status, or the issuer’s intentions, and it does not prevent every vulnerability.
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Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Clear out junk files and repair common Windows errorsFree Scan →Step 5: Check the legal status in the right jurisdiction
Determine whether the transaction may be a securities offering under the law where the offer is made and where you reside. If it is claimed to be exempt, look for the exemption or registration that is supposed to support that claim. A statement that an offering is exempt does not prove compliance. Also check the relevant regulator’s records for the issuer, any intermediary, and any adviser involved. The next section explains how regulators frame the question.
Step 6: Decide on the basis of total loss
Assume that the token may fall sharply in value, that the project may fail, and that recovery after theft or fraud may be limited. Do not invest money you cannot afford to lose. This checklist is general consumer guidance and is not individualized legal or financial advice.
Warning signs and what they do not establish
The FTC’s consumer advice puts the central warning plainly: “Scammers guarantee that you’ll make money or promise big payouts with guaranteed returns.” The table below lists the most common signals. Each one is a reason to investigate further, and the absence of any of them does not make an offering safe.
| Signal | Why it deserves scrutiny | What it does not prove |
|---|---|---|
| High or guaranteed returns with little risk | The SEC and FTC both identify promises of this kind as classic fraud signals. | A pitch that makes no explicit guarantee is not thereby safe. |
| Pressure to buy immediately, or unsolicited contact | Pressure can prevent careful verification, and the SEC lists these tactics as warning signs. | A real deadline alone does not show that the offering is fraudulent. |
| Celebrity endorsements or investor testimonials | Endorsements can be fake or irrelevant to legitimacy. The SEC’s fictional HoweyCoins example on Investor.gov shows how such material can appear in a convincing pitch. | A genuine endorsement is not due diligence or regulatory approval. |
| Claims of being “SEC-compliant” or approved by a regulator | A platform’s own label is not proof. Check the claim in official records, since the SEC has not reviewed a token or venue merely because a company says so. | An unfamiliar label does not settle a token’s legal status either. |
| A jargon-heavy white paper, missing rights, or unsupported projections | Regulators warn that white papers may be incomplete or misleading, and jargon makes verification harder. | A technically detailed document is not proof of honesty. |
| No published code or independent audit where the pitch depends on them | The SEC recommends asking about both. | An audit does not establish business viability and does not prevent all vulnerabilities. |
| A token launch that official company channels do not confirm | The FTC warns that scammers impersonate companies with fake token announcements. | A genuine announcement does not make the investment claims sound. |
How the law frames ICOs in different places
This section explains how two regulators describe the question. It is not a conclusion about any particular ICO, and the rules that apply to you depend on where you live and where the offer is made.
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United States
The SEC’s April 2026 explainer says securities laws apply to offers and sales of securities, including crypto assets that are securities. It also explains that some crypto assets that are not themselves securities may still be offered subject to an investment contract. Its summary of the Howey test lists four elements:
- an investment of money;
- a common enterprise;
- a reasonable expectation of profits;
- profits derived from the essential managerial efforts of others.
Whether a particular token sale involves securities therefore turns on its facts and circumstances, not on the token’s name or the issuer’s description of it.
United Kingdom
The FCA’s consumer statement, last updated February 27, 2019, says many ICOs fall outside its regulated space, while others may involve regulated investments or activities depending on how they are structured. It states: “Whether an ICO falls within the FCA’s regulatory boundaries or not can only be decided case by case.” The statement also notes that UK investors have limited protections for many ICOs. Check the FCA’s current guidance before acting, since a 2019 page may not reflect later changes.
Elsewhere
Other countries apply their own securities, consumer, and financial-promotion rules. Do not treat the U.S. and UK descriptions above as a worldwide standard. Identify where the offer is directed and where you reside, then check that jurisdiction’s regulator directly.
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