The issue arises when the lender is not on as a loss payee and the owner takes the funds and runs.

Only cash and certified funds are accepted as payment.

No firsthand experience, but every time I've seen this question come up the responses indicate that for a few small units LLC will not protect you better than simply adding an umbrella policy to your insurance while being more complicated and expensive to maintain.Also many snags to consider such as banks not likely to finance residential property to the name of an LLC, transferring to an LLC later can trigger a due on sale clause in your mortgage, if you mix personal funds and LLC funds to pay for something you can negate all legal protections.

Also, what are some of the things that one could do to perform due diligence before investing in this sort of crowd funding site?

Does anyone have any knowledge in investing in ICO's (Intial Coin Offerings) I am considering it as a method to raise capital to later invest in Real Estate. Yes, very risky but potentially very rewarding?, From resea...

I also read a few stories that required the lender (Hard/Private Money) to show proof of funds and the lender didn't/couldn't. 

I invest out of state in apartment buildings, but I highly suggest that you do not invest out of state as a new investor unless you're investing in a syndication or crowd fund  or you're able to dedicate time in the market if things go wrong.

What is the cheapest and most reliable source of funding for real estate investing outside the normal FHA203K and Fannie Mae Homestyle Renovation?

A meeting was set up for me to sign docs, and briefly read docs as I was signing, the wire instructions were included.Just prior to wiring funds , there was a warning about wire fraud , and I noticed that no letter head was included with the wiring instructions.

As far as finding deals, have you picked up @Anson Young's book, Finding and Funding Deals?