Security & Fraud

Investors Have Lost Close To $100M In ICO Scams

ICO

Based on new research from Diar, a blockchain intelligence firm, close to $100 million in cryptocurrency has been stolen via initial coin offering (ICO) exit scams.

According to a report in TheNextWeb, the figures in the research imply that during the past two years, ICO scams have totaled $98.6 million in value. In 2018, ICOs have raised $6.3 billion.

The report noted that the Chinese company Shenzhen Puyin Blockchain Group is responsible for $60 million of all the cryptocurrency stolen. Other big ICO scams, noted the report, include NVO and Cryptokami, with NVO raising $8 million and Cryptokami raising $12 million before going under. Cryptokami is out and NVO hasn’t updated its platform since March.

The researcher’s list also includes LoopX, which raised $4.5 million before stealing investors’ money, and Prodeum, which was embroiled in an exit scam as well. The researchers at Diar also found that among the top 10 ICOs that have been trading for six months or more, the average price decline is 93 percent when compared to the digital token’s all-time high.

Earlier this year, Engadget, citing data from Token Data, reported that of the 902 ICOs that blasted onto the scene in 2017, along with the price of bitcoin, 46 percent have failed. Among that percentage, 142 never got the funding and another 276 have faded away or were scams. What’s more, another 113 ICOs have stopped talking about their projects online or haven’t had enough adopters that success will be likely. Of the survivors, the report noted that only a few have raised more than $10 million via an ICO.

According to Engadget, excluding the ICOs that were outright scams, it’s not surprising that many of the ICOs and virtual coins failed to take off. Many were focused on niches such as dentistry or trucking, while others were riding the coattails of other successful tokens and thus didn’t stand out enough to get traction. The report noted that ICOs remain popular this year, but there’s no guarantee they will have a better go at it.

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