Token pre-sale scams
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Token pre-sales are periods during which organisations offer quantities of new tokens for investors to buy early. The 'pre' references the fact that these sales typically come before the actual sale — generally referred to as an initial coin offering, or ICO.
Not financial advice
None of the information here is meant to recommend or dissuade you from getting involved with token pre-sales or ICOs. Those decisions are entirely yours. All we aim to provide is an overview of how this subject area can be used by scammers to steal your funds.
These events naturally attract a lot of interest from speculators: if you jump on the right token at a bargain price, its price may skyrocket. Step 3: profit?
How does it work?
Scammers have been known to exploit ecosystem participants for their fear of missing out (FOMO) on these potentially astronomical financial gains. It's as simple as:
- The scammers set up a front end, usually a dapp to which they want you to connect your wallet. The level of sophistication here can vary: don't assume a site is safe to interact with just because it looks professional and legitimate. Web development is so accessible nowadays that even the least ambitious scammer could put together a relatively sleek-looking dapp with minimal time investment.
I'm not stupid: why do they think I'd fall for this?
One of the main tactics scammers employ to get around your cynicism is by capitalizing on hype. Often, the scam token will be associated with a big name, whether directly associated with web3 or not. A brief web search will tell you that scammers have repeatedly tried to create a buzz around a purported Amazon token. What they want you to think is clearly: why wouldn't you want to get in early on a token launched by one of the world's biggest retailers?!
With your judgement clouded by FOMO, they hope you'll buy in regardless of any doubts your more detached, rational self should have.
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They publicize the pre-sale, directing you to the site/dapp where the sale is to happen. They may try to drum up interest by paying for promoted pages on search engines or socials. Often these will attempt to:
- Appear legitimate by pushing out articles that mimic the design and domain names of trusted news sources
- Attract traffic by closely copying the appearance legitimate token pre-sale sites, but using a slightly different URL out of necessity.
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The site prompts you to buy the token. This will generally be a token approval, enabling the dapp to access and move tokens of a certain type from your wallet, up to a given cap (chosen by you).
The token involved will usually actually exist: anyone can create a new token with any given supply and name. It's just that, quite often, it will either not be the _actual _(most likely similarly-named) token it pretends to be, or it will be designed to substantiate some fictitious scenario in which they'd like you to invest (e.g. the fake Amazon token).
How can I stay safe?
Fake pre-sales depend on eliciting a few main behaviours from you. Here's how you should act to avoid falling into the traps:
- Verify the pre-sale is being offered on a legitimate site. Mistaking a scam for a real site is one of the main ways this attack rears its head. Always double-check the URL before you make any transactions. Check the social channels of any project/organization to make sure you follow the correct link.
- Make sure you understand the transaction before you sign it. Token approvals involve giving a dapp access to move (including withdraw) a given type of token from your wallet. If you don't understand what token approvals are and look like, do your homework here and here. It can be the difference between losing a bit of money and losing all your money.
- Don't recklessly FOMO into a pre-sale. Make your purchases based on rational thought, not emotion. Don't let your FOMO get the better of you.
If you have any questions about this subject, feel free to head to the MetaMask Community or get in touch with Support via the'start a Conversation' button on the homepage of this site.