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ICOs from Several Red Flagged Projects got $1 Billion in Funding

ICOs from Several Red Flagged Projects got $1 Billion in Funding

ICOs from Several Red Flagged Projects Got $1 Billion in Funding

Investors around the globe are mesmerized with the returns cryptocurrencies could bring. They have spent more than $1 billion in fueling digital coin projects. Many of them show warning signs of a typical scam. A Wall Street Journal report on Thursday cited its detailed analyses of 1450 crypto coin offerings.

The publication giant revealed that 271 coin projects had several red flags of scams. They included fake executive information and were working with plagiarized documents too. The lawsuits and regulatory actions against these projects show that the investors have already lost close to $273 million.

Initial Coin Offerings or ICOs are ways in which new crypto projects raise funds for their activities. Coin offerings are common in crypto and blockchain fueled projects and recently many traditional businesses have also moved to the ICO offering. Some businesses, reportedly included words like blockchain and cryptocurrency in their names or documents to fraudulently drive the value of their stocks higher.

Often, these fundraising activities are not as stringent as private fund-raising rounds for startups and IPOs done by new public companies. As these are unregistered securities, there is no regulatory oversight over them. In fact, the SEC has even warned the investors several times that they should not partake in these activities. It also launched its own fake cryptocurrency, HoweyCoin recently which could educate investors of the techniques frauds use to popularize their coins.

Despite these efforts, interest in cryptocurrencies hasn’t wavered for some time. In the past two years, these projects have raised a total of $9.8 billion, per financial research firm Autonomous Next. As there is no oversight, the companies could easily fool investors, partly because of their excitement to buy the ‘next bitcoin’.

The Journal found that 111 of the 1450 projects had plagiarized content from several online whitepapers for established digital coins. Some of them even had word-for-word copies of text in technical features and marketing plans. In fact, the demand for these whitepapers is so high that writers are getting $100 or more for creating one document. Note that some companies raising funds don’t have an office, an executive team or even a business model. One such Florida-based company was recently in hot waters as its three founders created executive team members out of thin air and had developed plans to kill them too.

Some projects have even lifted names and images of executive teams from popular coins to show that they are legit. Jenish Mirani, a Polish banker even found his profile picture used by Denaro, an online payment project. The company listed him as Jeremy Broker, its co-founder. However, the company did not respond to any communication from the Journal.

As regulatory oversight from the SEC is tightening, some ICOs have banned US citizens from participating in their fund-raising rounds. This helps them in avoiding troubles in the US. However, the people who have already invested in these projects are at a looming threat of losing their investment. In an effort to stop popularizing these projects, Google, Twitter and Facebook recently pulled down all ads related to cryptos and ICOs.

About the author


Brian Booker

An international financial analyst and writer. He has consulted for the Malaysian government, various MNC’s, and other organisations. He focuses on currencies, commodities, and emerging South East Asian markets.

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