This study investigates whether and when investors can distinguish genuine from superficial signals of innovation in blockchain startups’ open-source disclosures during fundraising. We introduce the concept of code-washing—the superficial use of source code repositories to mimic authentic development—as a novel mechanism of information manipulation in entrepreneurial finance. Using a global dataset linking GitHub activity to detailed fundraising outcomes, we classify startups as code-producers or code-washers based on the depth and timing of development activity. We estimate treatment effects on fundraising success, controlling for extensive startup characteristics and market conditions, and validate our proxies through tests of commit timing, external developer engagement, and responses to the 2017 SEC crackdown on unregistered token offerings. Our main analysis stratifies startups by investor attention—proxied by Ether market returns—and information richness, testing whether markets shift from pooling to separating equilibria as scrutiny increases. Consistent with signaling theory, we find that code-producers outperform only in periods of low investor optimism or high information availability, while code-washers’ fundraising advantage disappears. Post-fundraising, code-producers sustain innovation and deliver significantly higher returns, whereas code-washers experience declines in code activity and negative performance. These results highlight how information frictions enable superficial transparency to attract capital during hot markets, but only authentic innovation sustains long-run value, extending theories of signaling and market learning in entrepreneurial finance.