After researching a total of 1,450 ICOs, The Wall Street Journal (WSJ) found that more than one-fifth of them show signs of being a scam. For the record, this means there are at least 271 cryptocurrency startups that are likely fraudulent.
The study indicates that at least 124 ICOs faked or concealed team members, 111 had plagiarized white papers, 48 lacked a functioning website, and 25 guaranteed definite return on investment (something SEC explicitly forbids).
As per WSJ, while many of these ICOs have shut down, some continue to raise money from unsuspecting investors.
The findings further suggest sketchy cryptocurrency startups have managed to collect more than $1 billion in funds from investors – with loss claims for $273 million already been filed through lawsuits and regulatory actions.
The study found that many ICO team pages featured pictures from stock photos. The most striking example is perhaps Premium Trade, whose five-member executive team purportedly appeared on 500 other unrelated websites, according to a Google reverse image search performed by WSJ.
There have been numerous reports of blatant cases of fraud in the blockchain space, but this is the first time someone has quantified the total amount of such suspicious activity.
Miroskii, a shifty cryptocurrency startup, claimed to have raised close to a million dollars — in spite of featuring Ryan Gosling as their lead graphic designer.
It is not just Miroskii though. The list of ICOs that have pulled exit scams is much longer: Confido, BitConnect, Prodeum, LoopX have all disappeared with their investors’ money. Electrum Pro, an imposter of Bitcoin wallet service Electrum, also pulled an exit scam recently.
The number of rising cryptocurrency scams — in spite of its repeated warnings and even regulatory actions — even forced the US Securities Exchange Commission (SEC) to take a creative route in its efforts to educate investors. The regulatory body created a fake ICO with all the nitty gritties typical of a scam ICO.
The worry is not just limited to ICOs either, the entire cryptocurrency space is filled with malicious actors. There have been reports of multiple phishing attempts on Twitter and Google Play Store. Scammers even made a DNS attack on MyEtherWallet to empty out unsuspecting users’ wallets.
If you spot any overtly bullish claims like “registration with the SEC,” lavish “celebrity endorsements,” “guaranteed high returns,” or “a billion dollar solution” – you should avoid such investment “opportunities” like the plague.
@binam