ICOs probably biggest crypto scam

The CC Forums

Staff member
According to several publications today, ICO exit scam costs have reached $100 million.

That’s money that investors sent in hopes of making quick high returns on projects that never existed in the first place. Crypto is full of this garbage, and it needs to stop. In addition to the blatant scams, the article mentions projects that are quietly burning through their raised funds without producing any results. I be,dove that will,add significant losses on top of the $100 M referenced.

Here’s the full text of one report:

Volume 2 Issue 32 Original link

In the past week, the largest exit scam yet has reportedly been pulled by Shenzhen Puyin Blockchain Group in China. The company ran three ICOs - ACChain, Puyin Coin and BioLifeChain with the total amount raised of up to $60Mn. The scams are being investigated by State Market Regulatory Administration (SMRA) in China. Another one was discovered last week when NVO supposedly exit scammed after raising 3000 BTC ($8Mn at the time) to build a decentralized exchange and wallet.

Since Diar initially visited the topic, there was also an exit scam of Block Broker, an ICO to fund a platform to “completely eliminate ICO fraud by creating a 100% safe investment environment”(Diar, 23 April). Block Broker was rated on ICO review services such as TrackICO with five stars. The house of cards collapsed after it was discovered that the CEO’s profile picture was of an unaffiliated photographer. Block Broker ran away with more than $3Mn raised.

The total amount of successful exit scam ICOs is now nearing $100 Mn. Unsurprisingly, the blatant exit scams continue to plague the largely unregulated ICO sector where the founders have no contractual obligation to deliver a product. After raising millions of dollars with no string attached, the founders’ incentives to actually build a valuable company are very limited. Even if the founders were to build a valuable venture, it’s unclear at best whether the price of the utility token would reflect the success of the company.

With proper due diligence, the most blatant exit scams are not hard to pick out. Most promise unrealistic returns and run for a limited time to capitalize on the fear of missing out.

ICO Exit Scams

Name Date Amount
ACChain, Puyin, BioLifeChain August, 2018 $60,000,000
NVO August, 2018 $8,000,000
Cryptokami June, 2018 $12,000,000
BlockBroker June, 2018 $3,000,000
Miroskii March, 2018 $833,000
LoopX February, 2018 $4,500,000
Benebit January, 2018 $2,700,000
Prodeum January, 2018 $3,400
Elektra Coin November, 2017 $2,500,000
Confido November, 2017 $375,000
Ebitz November, 2016 $1,500,000
Opair July, 2016 $1,400,000
Total $96,811,400

The majority also uses fake profile pictures and plagiarizes most of the writings on the website and in the whitepaper. In May, The Wall Street Journal found that roughly 19% of the reviewed ICOs showed red flags such as plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams.

What’s much harder to recognize are projects that are slowly burning through the raised capital with no product to show for it. Less than a handful of projects have gone live and the ones that have gone live have seen very limited use. In the grand scheme of things, blatant exit scams are only a small percentage of the total amount raised through the ICOs. Most invested capital is tied in the largest projects. Diar crunched the numbers for top 10 ICOs whose tokens have been trading for at least 6 months and found that their price fell by 93% on average from their all time highs erasing $22.3bn from the market cap.