Initial Coin Offerings, or ICOs, have been both a blessing and a curse in the cryptocurrency industry since they started. Though much of the worry has seemed to be due to the potential for the founders of an ICO to be running a scam instead, the attention of the community needs to be turned to another threat – hackers.
For Crowd Machine (CMCT), the crypto community experienced another first-hand case of what a hacker can do. CMCT has been hosting an ICO recently, but a compromised wallet made it possible to pull out all of the reserve tokens, which made their market price reach a nearly rock-bottom level over the weekend. A Monday statement did not provide many details, but the company did its best to reassure their investors that the project would go on.
CMCT is part of the biggest current loss to CoinMarketCap, experiencing a 63% drop and bringing it down to $0.001887 for the price. The crash reached its worst level at 02:30 UTC on September 24th, eventually following the price to nothingness as most traders abandoned it. Presently, the loss is at about 81.63% over the last seven days. The BTC price for the token also went down from 129 satoshi to 27 satoshi. Though some investors are blindly hopeful, it may be time to abandon that ship as well.
This project was highly ambitious when it began, considering the AWS cloud services that it wanted to compete with. They wanted to be the starting point for enterprise-level apps, which would require decentralized computing power. This model is a lot like Golem (GNT), but there is no way that Crowd Machine’s distributed computing ecosystem will launch on time. The ICO originally wanted to perform daily auctions, but eventually gave up.
Making Crowd Machine’s restrictions on the ICO even worse, US-based buyers were prohibited from participating. Twitter user CryptoCookie posted a string of tweets about this situation, saying,
“#CMCT tried to copy the marathon ico style of #eos but when market dipped again after April they abruptly stopped and discontinued the #ico and said they will make an announcement when they restart again. Also, when the first round of presale started they withheld US citizens from participating and said US citizens will be able to participate after 4 weeks but will be able to benefit from the same % bonus that was given to others in the first round of presale.”
That was not the only accusation of red flags. Users also noted that there were no compensation tokens for advisors.
Right now, with such a large theft, other exchanges are likely to see the hackers dump the stash, considering that they will need a way to spend it. Most recently, the funds from the hacker’s wallet show that the coins are involved with the IDEX and HitBTC exchanges. The involvement in this ICO crash further adds to the industry’s concern that ICOs cannot be credible, but time will tell if they have a chance of being trustworthy again.