Fraudsters are rampant in the wild west of the Cryptocurrency space i am afraid and until there is more legislation (which could be a good or bad thing but that's another question) that isn't going to change any time soon, in fact a recent study found that about 80% of ICO's turned out to be scams and that only about 8% of projects will ever make it to an exchange. Its a scary and volatile world out there but there are ways to keep yourself safe.
Read the white paper -Whitepapers can be difficult reading and often go into technical detail a bit beyond most people without a technical knowledge of Blockchain technology but try to get a feel for the project, does it add instant value for the investor? is it filling a space because of the originality of the idea? or is it just another version of something else?. Does it sound like it is practically possible? Does it make outlandish claims about 10 billion transactions per second or something like that? I would advise you always to read the whitepaper before investing as a bear minimum. Get a feel for the project and what they are about. Look for an address and try to verify it through google.
If it sounds to good to be true it is! "send us 0.01 of an Ethereum and receive 1 Ethereum back" that's simply never going to happen. If i asked you to post me $100 dollars to a PO box at the other side of the country that you had no way of tracking in the promise of sending you $1000 back would you send it? of course you wouldn't.
Jump into telegram - Most projects have a telegram chat now, it's an easy way to get a feel for the project. Ask the admins questions, see how they respond, if they have 24 hr per day telegram support that are diligent about blocking spammers and do not contact you in direct message without your permission it can be a good sign they are legit....they may not succeed but at least they are contactable.
Check their native token - get on https://coingecko.com/en and, just to be safe, jump oto https://coinmarketcap.com too. Look up the coin, if it is listed and registered on these it's a good sign the project has been working away, not jst some scammer looking to get a fast buck.
Never do KYC until you are sure - If a project tries to get you to jump straight into KYC it can be a bad sign, worse it could give scammers a lot of personal information about you that they could use for god knows what. KYC is a necessary evil in the industry, I'm not saying never do it but be very cautious and sure about projects before you do.
The Golden Rule!! Never, ever invest more than you can afford to lose. What does that mean? well that depends on your personal circumstances but I would be very cautious about diving into something new with anything more than 5 or 10% of your current cryptocurrency investments. Scammer will make their 'project' seem like it is just about to turn investors into millionaires and try to make you scared to miss out on the chance of a lifetime but it almost never happens that people invest a little and then are overnight millionaires so use your head and be cautious.
Of course there are also legit, well meaning project that simply wont survive the test f time and often for no fault of their own. It is a very competitive market with many big money projects jostling to be the next eBay or amazon. There's very little you can do about this other than being cautious about the amount you invest.
Good Luck!
