Confido, the startup that raised $374,477 in an initial coin offering (ICO), has reportedly disappeared with the investors’ money.
According to a news report in The Next Web, Confido, which said it was developing a trustless payment network for online shopping, has taken down its website and its value declined 90 percent after letting investors know that a legal issue will stop development of its project for good. What’s more, it removed its social media footprint from the internet, which included shuttering its Twitter, Facebook, Reddit and Medium accounts.
This isn’t the first cryptocurrency company to go under during the course of the last several weeks. Bitpetite went dark in October with thousands of investors left with nothing, reported The Next Web.
The disappearance of Confido after raising money via the initial coin offering is a cautionary tale of the risks associated with investing in these types of unregulated ICOs. Regulators around the world have been warning about the associated – in fact, China and South Korea banned ICOs outright. The SEC, for its part, is growing increasingly wary of initial coin offerings, and is increasingly likely to step up regulatory action.
A security by any other name is a security, according to SEC chief Jay Clayton – and while the coins offered in initial coin offerings may not be exactly the same, they are close enough to merit a much greater level of regulatory scrutiny.
During a speech before the Practising Law Institute on Wednesday, Clayton spoke about how to create a “thoughtful” approach to transparency, such that both investors’ interests are protected and federal and local laws are actually followed. Clayton said that he is specifically concerned about the lack of transparency inherent in a large proportion of online platforms that list and trade virtual coins, or tokens, that have offered and been sold in ICOs.