According to a recent Diar study, fraudulent ICOs cost investors almost $100 million. Researchers have counted funds stolen since the beginning of July 2016. According to Diar, in the first two weeks of August alone, two large-scale fraudulent ICOs managed to earn $68 million from unwary investors.
According to reports, the largest ICO scam in history was carried out by the Chinese company Shenzhen Puyin Blockchain Group. The company conducted three ICOs - ACChain, Puyin Coin and BioLifeChain - and raised $60 million before attracting the attention of the Chinese regulator. According to Cryptovest, six people associated with Puyin Coin, a coin allegedly backed by the prized Pu'er tea, were arrested in China on suspicion of fraudulent activities.
In the first two weeks of August, another fraudulent scheme called the NVO project was discovered. Its creators managed to attract more than 3,000 BTC (approximately $8 million at the then exchange rate), promising to create a decentralized exchanger and wallet. According to information on the project website, the exchanger was supposed to be launched in the first quarter of this year. It is noteworthy that this year the creators of the project have not been active on Twitter, although last year their account was constantly updated with new information.
Ironically, another fraudulent project turned out to be Block Broker, which raised $3 million to “create a platform that will completely eliminate fraudulent ICOs by creating a safe investment environment.” On most cryptocurrency websites, this project had an excellent rating, and there were no signs of trouble. However, in July it became known that the photo of the Block Broker CEO was actually a photo from the Internet. Of course, no platform was built.
According to Diar, this is a serious problem, especially against the backdrop of the falling price of cryptocurrencies:
“It is not surprising that such scams continue to easily make huge amounts of money in an unregulated market in which the creators of the project have no obligation to deliver the final product. After developers receive millions of dollars for nothing, their desire and incentive to create a worthwhile product simply evaporates.”
Fortunately, with due due awareness and caution, it is not so difficult to identify fraudulent schemes. They use the same tactics as other scammers - promising unrealistic returns, copying content from other websites and white papers, and often using photos downloaded from Internet archives...
“It is much more difficult to identify projects that will slowly burn through funds without providing a viable product,” the report says. “A lot of projects have started, but most of them have practically no real use cases”
According to https://cryptovest.com
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