WSJ Report: 20% of ICOs Are Complete Scams
The Wall Street Journal recently published a study showing that 20% of raised ICO funds – or approximately $1 billion – went towards scams and fraudulent projects.
The Wall Street Journal reported the study Thursday after reviewing 1,450 digital currency offerings. According to the study, 271 of the 1,450 digital currency projects were identified as scams. A further 111 projects were blatantly plagiarized. These projects used whitepapers and websites that were copied word-for-word from other ICO projects online, for example.
The Journal also identified 124 projects with fake or concealed team members.
We’ve reviewed countless ICOs that will refuse to disclose team information. Or, other projects will steal pictures from elsewhere on the internet, then post them in their team section and claim they’re the project’s CEO, CTO, or another executive.
In total, investors have contributed $1 billion to fraudulent projects and scams.
This number exceeds other reported figures. As mentioned by CNBC, ICO investors have already lost a reported $273 million when you total the amounts claimed by lawsuits and regulatory actions taking place against ICOs.
The study also mentioned the fact that writers online will happily charge $100 or more to write a complete whitepaper for a company. From there, a company just needs to create a basic website, generate hype for the token sale, and watch the funds roll in.
The Wall Street Journal used a number of red flags to identify scams. They cited issues like a fake or concealed team, an obfuscated company location, fake photos stolen from elsewhere on the internet, a vague or unnecessarily complex whitepaper, promises of financial rewards without any risk, unresponsive websites with just a countdown click, and other common warning signs.
Ultimately, The Wall Street Journal inadvertently confirmed something important with this study: they confirmed that the vast majority of ICOs – approximately 80% – are for legitimate companies. I don’t know about you, but I’m surprised that only 20% of ICOs are scams – based on some of the low-quality projects we see online, the number seems like it could be much higher.
In any case, you can view the full study from The Wall Street Journal here. The Journal ran their study with the sensationalist headline, “Buyer Beware: Hundreds of Bitcoin Wannabes Show Hallmarks of Fraud.”