Lawyer's view: how to avoid scam ICO

Well, every time I see somebody start to pitch ICO I feel strange. From the one hand it’s a good idea to raise money and find something new, interesting and powerful. As an adviser I know hundreds of worthy projects to invest. But at the same time there are a lot of ways to fool investors and crypto enthusiasts. You know these guys. For ICO market it is very important to increase trust that’s why the main problem is to know which scam projects to avoid. These are the main criteria:

1. First of all is project's team. Is not a secret that success depends on people. I mean not the advisers and even not the founders, namely it is about executive management team. CEO, CTO, CMO and others - these are the people that the strategic course of the project and tactic would depend on. They must be deeply experienced in their field. Note they should have an active profile on facebook and linkedin. At the same time it is not about previous projects that were successful: in my opinion American venture funds are more likely to invest in projects whose leaders have failed than those that were successful.
2. A team of developers, marketing and PR managers, analysts etc. It is important for every person to be real. Check if there are videos or photos from the office or a photo of the team.
3. Advisors are an important element as well. They should not be exposed in the scam-ICO, must have a good reputation, fame and be ready to defend the interests of the project. If the advisers are on the site for show, this is definitely a scam.
4. A business-conception. Launching a drone on Mars, where the tokens are equated with the Martian sand, will be mined there, is a scam. The idea must be realizable and understandable. It is desirable that the project works, at least as MVP. Projects at the idea stage are more risky to be a scam, as the risk that a product will not be created is very high.
5. Code. It is the development of value, or has nothing to do with the blockchain. Projects launching ICO with a product or ideas that are not related to IT and the distributed ledger cause an ambiguous attitude towards themselves. Nevertheless, this does not deprive them of the right to raise funds in this way. However, it is desirable that the project really was tied structurally on the detachment and carried value to the community. Typically, the story is a development, or a part is laid out on github.
6. And what about token. What does it really give to the investors? Were legal aspects settled? Will this token be listed on crypto-exchange? How to buy it? Is fiat accepted for tokens? One of scam signals can be a large discount on tokens at an early stage. Such an economic model of ICO will resemble a pyramid.
7. Legal. Pay attention to the documents. The Terms & Conditions of the Seal are obligatory and the privacy policy of the users. It is necessary to determine the jurisdiction which will be used for the tokens issue, if any, is made, and to ask an experienced lawyer whether such a scheme violates the laws of this country. If there is no legal information on the website, there is a risk of a scam.
8. An escrow is also important. The escrow as a way to ensure the execution of obligations before the tokenholders can have a good reason why this project is not a scam. An escrow can be a technical solution, but it's better that real people would perform this function, enjoying the trust in the community.
9. Then verify the smart contract and check if it is the way it was announced. You can see this information in the blockchain. If the result is artificially understated, the project is likely to be a scam.

I would be happy if you share your ideas how to identify scam.

You can find out more about ICO scams in this similar editorial on Bitnewstoday.