Researchers Find that 80% of ICOs in 2017 Were Scams
The initial coin offering (ICO) list for 2018 is booming. According to the statistics, more than $12 billion has been raised by ICOs so far this year, which is almost $1 billion more than 2017’s total. For all intents and purposes, the market for crypto fundraisers is in a positive place. However, according to a study by the Statis Group, all is not as rosy as it seems.
ICO Scam List Grows in 2017
With many people still asking what is ICO X or Y, scammers have seen an opportunity to strike. Taking advantage of the uninformed, criminals have been using ICOs to dupe unsuspecting investors. Reviewing the ICO register for 2017, researchers at the Statis Group found that 80% were scams. Although the researchers’ definition of a scam was slightly broader than a deliberate ruse to take people’s money, they found that $1.34 billion was donated to rogue projects.
“Over 70 percent of ICO funding (by $ volume) to-date went to higher quality projects, although over 80 percent of projects (by # share) were identified as scams,” reads the report.
Overall, many of those identified as a scam had died i.e. the projects/coins had disappeared and weren’t listed on any exchanges. However, three ICOs were responsible for the bulk of misdirected investments: Pincoin ICO ($660 million), Arisebank ICO ($600 million) and the Savedroid ICO ($50 million). The latest findings come at a time when Bitmain founder Jihan Wu has criticized ICOs. Talking to CoinGeek, Wu said that the current rate of growth is unsustainable and the ICO token sale bubble will eventually burst.
ICO Security Improving
For many, the ICO crypto boom is a result of 2017’s surge of interest in digital currencies. With non-experts seeing coins as a way of making some “easy” money, interest has turned to initial coin offerings. As is often the case when new money floods a market, scammers aren’t far behind. Although the latest research has made the headlines because cryptos are a hot topic, the reality is that this type of thing happens in a number of industries. However, even though scams are a natural part of doing business, there are those that are working to limit the damage they can do.
After falling victim to an ICO scam, Patrick Kim set about creating a new security protocol. Off the back of this, the Uppward browser extension has been launched. Available for Chrome users, the add-on monitors websites and sends the user a warning if it looks suspicious. For anyone sizing up the latest ICO list, this should become a standard tool. However, for the industry at large, regulation is crucial. In recent weeks, financial institutions such as German exchange Stuttgart Börse have announced its intention to launch an ICO register in 2019.
Through these innovations, the average consumer will be offered a better level of protection. Although scammers will always seep through the cracks, the ICO industry is moving in the right direction. Every fledgeling industry has to learn from its mistakes and it seems as though 2017 may go down as a learning curve for the ICO market.