Bitcoin Investors Lured With Fraud And Fake ICOs


Bitcoin buyers beware: A new report in The Wall Street Journal has found hundreds of tech firms are using deceptive or fraudulent tactics to attract investors.

After reviewing 1,450 documents downloaded from three popular websites that track coin offerings, the Wall Street Journal discovered 271 with red flags that included plagiarized documents, pledges of guaranteed returns and missing or non-existent employees.

One example used was the case of “Jeremy Boker,” who is listed as a co-founder of Denaro, an online-payment project that claimed to have raised $8.3 million in a public offering in March. In documents and in his bio, Boker touted his crypto startup’s “powerhouse” team and boasted about his “respectable history of happy clients” before launching Denaro.

But the WSJ found that Boker’s bio image was actually a stock photo, and there is no evidence he even exists. In fact, the company's entire team appears to be fictional, with the exception of two freelancers hired to market the project. However, neither of them could identify who paid for their work.

Investors have given more than $1 billion to these 271 coin offerings, and have so far claimed losses of up to $273 million as a result. While some of the firms are still raising funds, others have shut down.

When examining the 1,450 white papers, the WSJ also found 111 that repeated entire sections word-for-word from other papers, and at least 121 of the projects didn’t disclose the name of even one employee. Several listed team members who either didn’t exist or were real people who said their identities were being used without their knowledge.

In addition, there were also more than two dozen companies that promised financial rewards without any risk, which the Securities and Exchange Commission prohibits. In fact, some of the firms guaranteed weekly payouts or doubled returns.

Copied language, the absence of named employees and promised high returns are “warning signs for investors,” said Bradley Bennett, a former enforcement chief at the Financial Industry Regulatory Authority. “There are going to be some legitimate players that emerge from this, but it’s going to be a handful—a lot of it looks like penny-stock fraud with lower barriers to entry.”



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.