WSJ REPORTS ON HALLMARKS OF ICO FRAUD AND BAD ACTORS

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ICO Hallmarks of Fraud

A Wall Street Journal analysis of 1,450 ICOs reveals systematic plagiarism, ID theft and promises of unrealistic returns. In a review of documents produced for 1,450 ICOs, The WSJ has found 271 red flagged ICOs including plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams. In other words: approximately 20% of the ICOs investigated are to be deemed a scam.

Denaro ICO Scam
Source: Live Bitcoin News

An ICO actor named “Jeremy Boker”, for example is listed as a co-founder of Denaro, an online-payment project. In investor documents for a public ICO in March 2018, which claimed to have raised $8.3 million, Mr. Boker bragged of his crypto-startup’s team. In his biography, he noted a “respectable history of happy clients” in consulting before he launched Denaro. In fact, the management team’s profile pics were stock photos:

Actually, there is no evidence that Jeremy Boker or Amy Archer really exist and the rest of the team also seems to be fictional, except for two freelancers who said they were paid by people unknown to them to market the project, the Journal found (read more here on Reddit and here on Live Bitcoin News).

WSJ Hallmark of Crypto-Fraud
Source: WSJ Online

One Billion Gone Up in Smoke

In total, investors have invested more than $1 billion into these 271 ICOs where the Journal identified red flags – nearly one in five of those reviewed. Some of these ICOs are still raising funds, while others have shut down.

Investors have so far claimed losses of up to $273 million in these projects, according to lawsuits and regulatory actions.

Companies use ICOs to raise funds by selling their tokens or coins. Led by the bitcoin fever, the 1,450 projects analyzed by the Journal—a number believed to encompass most of those aimed at an English-speaking audience since 2014—say they have raised at least $5 billion. Since 2017, ICO offerings have generated more than $12 billion in proceeds globally and a large part of these funds were raised by fraudulent schemes.

Just recently the US SEC launched a campaign to warn investors about ICO scammers.

White Papers Plagiarism

Of the 1,450 white papers checked, the Journal found 111 that repeated entire sections word-for-word from other white papers. The copied language included descriptions of marketing plans, security issues and even distinct technical features such as how other programmers can interact with their database.

People Are Not Disclosed

At least 121 of the projects didn’t disclose the name of a single employee and several of them listed team members who either didn’t appear to exist, as with Denaro, or were real people who said their identities were being used without their knowledge.

WSJ’s revelations are not really new but the report presents some impressive numbers. With nearly 20% of the investigated ICOs being fraudulent or at least questionable investment ventures, we may assume that billions of investors’ money are lost. Moreover, and that’s even worse, the crypto-industry in general and the ICOs, in particular, have lost a great chunk of their reputation.

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