Survey: fraudulent ICO attracted more than $ 1 billion

Journalists of the Wall Street Journal conducted their own research of the ICO market, and concluded that the number of fraudulent crowdfunding campaigns is much higher than the figures previously mentioned in the press. According to researchers, cryptocurrency holders have lost more than $ 1 billion.

How to detect fraudulent ICO

Of the 1,450 tokens examined, in 271 cases signs of fraud were identified - for example, the documents used in the ICO description were literally copied from other projects, non-existent people were in the lists of team members, among the published promises were theses falling under the description of the Ponzi scheme.
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The researchers recommend paying special attention to the analysis of the so-called “white books” (white paper), in which teams of blockchain-startups describe their projects. Often fraudsters completely or partially copy such documents up to the names of team members and project mission descriptions. In addition, marketing plans, descriptions of security features, and even descriptions of development progress can be copied.

Researchers managed to find freelancers at remote sites who, for small amounts of the order of $ 100, offer the creation of such documents on a turnkey basis - most likely they use scripts that simply substitute new scammers for the project in the base text.

How many investors lost

Despite the fact that the press often publishes various guidelines on how to distinguish a bona fide ICO from fraud, many cryptocurrency owners do not conduct a proper analysis of projects in which they invest. As a result, 271 fraudulent ICOs managed to attract more than $ 1 billion. Currently, only $ 273 million are the reason for filing lawsuits - many investors still prefer not to notice signs of fraud.

To raise awareness of potential investors, the US Securities and Exchange Commission (SEC) launched a special site of the “fake ICO” non-existent project Howey Coins (the name refers to the famous Howie test). It combines all the signs of fraudulent ICOs, including the promise of unrealistically high incomes, the offer of big discounts when buying tokens "here and now." Those users who fail to recognize the fraud and try to buy project tokens are redirected to the SEC educational website.

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