I'm not sure about libel, but I doubt anyone involved would even go that route, especially if the ICO is shady. In any case, it doesn't sound too hot to me. Why did they contact you, or did I miss that part?
Edit: So they want you to manage a campaign against another project? Not sure if I understood your last post correctly. If I did, and I were you I'd not take part in this. Your reputation might get sullied by this--that's what my gut is telling me.
I'll likely pass on the project period, but this issue has never come up for me before so I wanted community opinions on it.