271 Fake ICOs Have Cost Investors $1 Billion
If you've been an avid follower of cryptocurrency over the past few years then you've probably encountered the investment opportunity ICO's bring to the table. These speculative tech companies looking for funding and offering investors high yield return opportunities are sometimes too good to be true. Yes, there have been ICOs that have 10 to even 500x'd investors money but those are few and far between, many of these ICO's never reach any viable stages or worse, exit scam and disappear.
Sadly exit scams have become so popular that it has even become a parody in the crypto space with some projects faking exit scams.
Read about SaveDroid $50 Million ICO Exit Scam Publicity Stunt
Abuse of the ICO
Autonomous Next, a financial research firm, found that ICOs alone raised over $9.8 billion within a two-year time frame. So its safe to say there is plenty of money lying around waiting to be picked up by ICOs;. However this form of capital injection has been abused of late and I've even gone as far as to state categorically that ICO's will prove to the the bubble that unravels the cryptocurrency market
You can read more about it in my previous post - Why ICO's Will Result In the Bubble Bursting
Fake ICO's costing the industry Billions
Last Thursday, the Wall Street Journal independently published its own findings after they had reviewed documents produced for 1,450 initial coin offerings (ICOs) in the last 2 years.
The study has produced the following results:
18% of ICOs were found to have red flags that include plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams.”
Of these fake ICOS Investors have poured more than $1 billion into these 271 ICOs, the publication detailed, adding that
“some of the firms are still raising funds, while others have shut down. Investors have so far claimed losses of up to $273 million in these projects, according to lawsuits and regulatory actions.”
The plagiarism of some ICOS
One of the most important documents an ICO should have is a white paper. A white paper is a detailed description of how the project will be executed, and the necessary measures to be taken in order to execute their proposed roadmap. This allows investors to assess the potential a project has and investing accordingly.
The Journal went on to state that plagiarism took place not only in relation to the team members on board but also the whitepapers, marketing plans and technical features noted. Due to the high demand for cryptocurrencies, freelance writers are even willing to write such falsified documents for over $100.
An unbelievable example is that of Polish Banker, Jenish Mirani, who supposedly came across his picture in the Denaro project, which promotes online payments, as a co-founder under the name, “Jeremy Boker”. Based on the claims made by the Journal, the company has yet to respond to the calls made.
Just what we need, More FUD
The timing of this studies release doesn't come at a great time as Bitcoin and ETH have been testing lower and lower resistance levels and has already passed the date of last years bull run. While I'm still pretty bullish that we will hit an all-time high this year I think that every bit of FUD contributes to weaker hand and loss of investor confidence.
What are our options to reduce ICO fraud
In the wake of these ICO losses an interesting alternative to the traditional has been proposed called an ILP which advocates more financial responsibility with and adds legal implications around the use of funds.
You can read more about what an ILP is in my previous post ILP A Possible Alternative To ICO's
Have your say
What do you think we should do about curbing fake ICO's? Do you think its more of an investor responsibility? How do we help educate people wanting to invest in ICO's?
Drop me a comment like its hot!
Recommended reading
If you found this post interesting you may also like
- ILP A Possible Alternative To ICO's
- Shitcoin of the week: Bunny Token
- Why ICO's Will Result In the Bubble Bursting
- SaveDroid $50 Million ICO Exit Scam Publicity Stunt
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