How to Stop a Fake Crypto Project During an Initial Sale: A Guide to Due Diligence and Action

The rise of Web3 and decentralized finance has opened up groundbreaking opportunities—but it has also given rise to sophisticated scams hiding behind glossy websites and token presales. Fake crypto projects, especially those launching initial token sales or “pre-sales,” can trap unsuspecting investors, damage the ecosystem’s reputation, and in some cases, operate unchecked for months.

If you suspect a project is fake—or want to stop one before others fall victim—here’s how you can take action.

1. Spot the Red Flags Early

Before anything else, it’s critical to recognize the warning signs:

• Anonymous or unverifiable team members

• No smart contract audit or open-source code

• Overpromises with vague or plagiarized whitepapers

• No registration, licensing, or legal structure

• Fake partnerships or inflated social media stats

• “Time-limited” investment windows with pressure to buy in early

If the project checks multiple red flags, there’s reason for serious caution.

2. Conduct a Basic Due Diligence Check

Before launching any report or complaint:

• Verify the team using LinkedIn, public records, or previous ventures

• Check the smart contract on blockchain explorers like Etherscan or BscScan

• Search for plagiarism in whitepapers or on the website

• Run domain WHOIS lookups to identify who registered the project site

• Use tools like RugDoc, TokenSniffer, or CoinScam to assess risks

You don’t need to be a blockchain developer to find inconsistencies—many fakes rely on surface-level deception.

3. Warn the Community (Responsibly)

If you have evidence, take action by alerting the community:

• Post findings on Twitter, Reddit, or Telegram, but be factual—defamation laws apply

• Share screenshots, links, or smart contract addresses to support your claim

• Use crypto whistleblower platforms (like Chainabuse or Scam Sniffer) to post public alerts

• If influencers are unknowingly promoting the project, privately message them with the evidence

This helps reduce the damage by preventing further investor engagement.

4. Report to the Platforms

If the project is hosted on or promoted through any of the following, report it:

• CoinGecko / CoinMarketCap – flag suspicious listings

• Telegram / Discord – report scam groups or impersonators

• Twitter / Instagram / YouTube – report fraud or impersonation

• GitHub – if the smart contract or code is copied without license or fake

• Blockchain explorer platforms – some allow tagging contracts as scams
  

5. File a Report With Authorities

Depending on your location, consider reporting the project to:

• Your local financial regulatory body (e.g., FCA in the UK, SEC in the US)

• Cybercrime units or national fraud services

• Europol, FBI, or Interpol if it involves international fraud

• If you’ve lost funds, also contact a blockchain forensics company to trace the transaction

Tip: Legal enforcement is often slow, but submitting a report creates a paper trail that may help future actions.

6. Use Decentralized Tools for Transparency

You can mark the project directly on blockchain with services like:

• Etherscan contract comments – visible to all explorers

• Blockchain analytics tools like Breadcrumbs or Crystal to flag risk

• DAO communities and governance forums can also block listings or revoke partnerships
  

Final Thought: Your Action Protects Others

Stopping a fake crypto project is about more than protecting your own wallet—it’s about safeguarding the entire digital asset ecosystem. Fraud and deception erode trust in innovation. By staying informed and speaking up, you’re playing a vital role in building a more secure and responsible Web3 future.