Initial coin offerings are becoming more and more numerous, as many newly formed companies view them as an effective tool for raising money for their projects. Unfortunately, the regulatory framework is still absent, which opens door to potential scammers, who pretend to be real companies but in fact just waiting to disappear with the money.
The Wall Street Journal has thoroughly analyzed 1,450 ICO sites and marked 271 projects as potentially fraudulent. The typical signs of a scam ICO are: bold claims of no risk returns, staggeringly high percentage returns, and, of course, promotion deals with celebrities.
The journal was able to find several projects with plagiarized texts on their websites. Some scammers even used stock photos of random businesspeople and presented them as the company’s team. The research also brought to light 111 cases of copy-pasted whitepapers, with entire sections stolen from other companies.
Despite all this sloppiness on the part of the scammers, these fake projects still manage to convince people to invest in them. According to the published research, these 271 suspicious ICOs secured more than $ 1 billion in funding, and some of them are still functioning, while others have been closed by Securities Exchange Commission.