How to tell if an altcoin is a scam?

The seven key indicators for identifying altcoin scams include: 1. Anonymous team or suspicious background, 2. Unreasonable token economics, 3. Unaudited code or loopholes, 4. Overmarketing vs. Actual products, 5. Anomalies in liquidity pools or trading restrictions, 6. Exchange "Dogcoin" trap, 7. Community quality and public opinion trends. With these metrics and real cases, investors can better avoid traps in the cryptocurrency market.

Mainstream currency exchanges in 2025:

Ouyi OKX:

Binance Binance:

Huobi:

Gateio Sesame Opening:

bitget:

How to identify an altcoin scam (Scam)? 7 real cases of key indicators

The cryptocurrency market is full of scam projects, from "Rug Pull" to false endorsement, investors need to learn to distinguish. The following are 7 core judgment methods, combined with real cases, to help you avoid traps.

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1. The team is anonymous or the background is suspicious

✅ Normal items:

• Core members are public (can be found in LinkedIn, GitHub).

• Have experience in the blockchain industry (such as former Coinbase and ConsenSys employees).

Red flags:

• The team is completely anonymous (as unknown to the founder of Squid Game token).

• Forgetting identity (using AI to generate avatars, such as the "Evgeny Sobolev" scam).

• No technical background (led by marketing team, no development capabilities).

Case:

• TITAN (IRON Finance) – The team was anonymous, plunged to zero in 2021, cashing out hundreds of millions of dollars.

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2. Tokenomics is unreasonable

✅ Normal items:

• Token allocation is transparent (team

• The unlocking cycle is reasonable (non-one release).

Red flags:

• Team/private equity accounts for too high (>40% token centralized control).

• No locking mechanism (selling is sold if it goes online).

• Unlimited issuance (extremely high inflation rate, such as early Shiba Inu).

Case:

• Terra (LUNA) – Before the collapse of the algorithmic stablecoin UST, the team continued to issue additional LUNA to cash out.

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3. The code is not audited or there are vulnerabilities

✅ Normal items:

• Audit through CertiK, SlowMist, OpenZeppelin and other audits.

• Open source code (can be checked by GitHub and can be reviewed by the community).

Red flags:

• No audit report (or unknown to the audit company).

• The code is not open source (such as OneCoin scam).

• The contract has a backdoor (can be unlimitedly issued or frozen user assets).

Case:

• AnubisDAO – Unaudited, Founder swept away $60 million.

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4. Over-marketing vs. actual products

✅ Normal items:

• Focus on technology development and regularly update the roadmap.

• The community discusses technology, not the slogan of "get rich".

Red flags:

• Exaggerated publicity (such as "Next Bitcoin", "100x return").

• Paid KOL calls (suddenly promoted by Twitter/telegram group).

• Fake Partners (claimed to work with Visa, Binance but no evidence).

Case:

• Hex – Calling itself “blockchain time deposit” is questioned as a Ponzi scheme.

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V. Liquidity pool abnormality or trading restrictions

✅ Normal items:

• Liquidity locking (such as via Unicrypt).

• Supports free trading (no withdrawal restrictions).

Red flags:

• The liquidity pool is extremely shallow (large selling causes the price to plummet by 90%).

• Only buy but not sell (contract restriction on selling function).

• LP tokens are not locked (the team can withdraw funds at any time).

Case:

• Thanos (THANOS) – The developer removes liquidity and the coin price returns to zero.

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6. Exchange "Dogcoin" trap

✅ Normal items:

• Online mainstream exchanges (Binance, Coinbase).

• There is real trading volume (non-brush volume).

Red flags:

• Only launch small exchanges (such as Meme coins on PancakeSwap).

• 90% of the transaction volume comes from a single address (fixed volume).

• "Insider Presale" (early investors get tokens at low prices).

Case:

• Squid Game (SQUID) – Only PancakeSwap was launched, and it plummeted by 99.99% after soaring.

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7. Community quality and public opinion trend

✅ Normal items:

• Community discusses technology and ecological development.

• Developers actively answer questions.

Red flags:

• Telegram/Discord is all robots (repeat "To the moon").

• Questioners are kicked out of the group (negative discussion is prohibited).

• No long-term roadmap (only short-term hype).

Case:

• BitConnect – Community fanaticism, questioners were banned and eventually closed by the SEC.

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Before You Invest

1. Check the team: Is it real name? Are past projects reliable?

2. Check token allocation: Does the team/institution control the disk?

3. Check the audit report: Are there authoritative audits such as CertiK?

4. Check liquidity: Is LP locked? What is the depth of the pool?

5. Check the exchange: Is it online for mainstream platforms?

6. Check the community: What is the quality of the discussion? Are there real users?

7. Check the product: Is there any practical application? Or pure concept?

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Summary: How to avoid altcoin scams?

DYOR (Do Your Own Research) – Don’t blindly follow the trend.
Small test – first invest 5%-10% of funds to verify the authenticity of the project.
Beware of the temptation to get rich – 99% of the "100 times coins" are scams.

Remember: If it's too good to be true, it probably is!

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