Last updated on June 9th, 2018 at 12:43 pm
If you’re a bit familiar in the cryptocurrency-world, you know it’s not a secret that initial coin offerings (ICOs) sometimes turn out to be a fraud, costing investors a lot of money. But exactly how many ICOs turn out to be a scam stays unclear – they usually disappear, giving not much of a reason.
To create some transparency in the world of phony ICOs, The Wall Street Journal researched 1,450 cryptocurrency projects that announced an initial coin offering.
The result? Of the 1,450 ICOs, The Wall Street Journal considered 271 fraudulent. That’s nearly 20% of all ICOs (18.69% to be exact). A staggering amount.
The Journal used several indicators to give an ICO a ‘red flag’, meaning it’s likely to be fraudulent. These red flags consisted of;
- Duplicate language, for example in whitepapers
- No team/fake team, using stock photos from other websites
- No Website, speaks for itself
- Guaranteed returns, which is impossible and illegal to claim
Some of the findings in the research are almost laughable, like investment startup Premium Trade using generic stock photos to fill their ‘team’-page with. That reminded me about Ryan Gosling as graphic designer. White papers are also a great inspiration for plagiarism, where The Journal found the same sections – word for word – in 111 white papers.
This level of amateurism almost makes you forget that sketchy crypto startups collected over $1 billion in funding from investors. This has lead to loss claims for an amount of $273 million, which have been filed through lawsuits, according to the Journal. That’s some serious cash.
The Wall Street Journal has not published the names of the ICOs that were flagged in their research, but it’s a good reminder to stay aware of where you’re putting your money. Double check the white paper, check for plagiarism and ignore claims that can’t be made to keep your investment safe.