10 Biggest ICO Scams Have Swindled $700 Million

10 Biggest ICO Scams Have Swindled $700 Million
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New data from Fortune Jack has found that ten of the most high-profile ICO scams have swindled a staggering $687.4 million from unsuspecting investors.

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In a world that is becoming increasingly more regulated, many financial experts claim that fraud is becoming less frequent. But, despite such a notion, it could be argued that cybercriminals are not necessarily giving up – they’re just getting smarter.

When invested in correctly, cryptocurrencies can quickly turn the average investor into a multi-millionaire however, the decentralisation and lack of regulation for so many cryptocurrencies has paved the way for fraudsters to swindle thousands of unsuspecting investors.

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So, what is the latest scam to enter the cryptocurrency market? The answer is Initial Coin Offering (ICO) scams...

Bitcoin Magazine defines an ICO as “ A fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin and ether. It’s somewhat similar to an Initial Public Offering (IPO) in which investors purchase shares of a company.”

ICOs are fairly new, however, as an awareness of cryptocurrency has spread, many investors have ploughed millions into a mechanisms all hoping to profit from the cryptocurrency phenomena.

In fact, new data reveals that $20.1 billion has been invested across 789 ICOs in 2018 to date, that’s a whopping 222% in the amount invested into ICO’s compared with the entirety of 2017.

What could concern many investors is the black and white figures proving that ICOs can cost you more that you’d like. Research from Satis Group predicted that 80% of all ICOs in 2017 were fraudulent scams. If this is true, this could mean that 631 ICOs in 2018 could be fraudulent.

So, how have fraudsters managed to $687.4 million from investors? The answer lies in the ten most high-profile ICO scams to date...

REVEALED: 10 biggest ICO scams swindled $687.4 million

  • The ten most high-profile ICO scams stole a staggering $687,425,000
  • Pincoin and iFan scam is believed to have affected 32,000 investors
  • More than 150 scams are publicly identified with the number set to rise
  • ICOs remain relatively popular with $20.1 billion invested across 789 ICOs in 2018 to date

Initial Coin Offerings are one of the most tempting investment options for those hoping to profit from the ever-evolving world of cryptocurrency. However, the lack of regulation has allowed ICO investors to become targets of sneaky schemes.

Though ICOs have snowballed, with more than 750 being invested in during 2018 alone, the number of scams has also steadily risen, with more victims of fraud falling prey to cryptocurrency criminals.

Following Satis Group’s revelation that approximately 80% of 2017 ICOs were identified scams, new data from Fortune Jack has found that just ten of the most high-profile ICO scams have swindled $687.4 million from unsuspecting investors.

In fact, the notorious Pincoin and iFan scam stole $660 million, with an estimated 32,000 investors falling prey to the money-making plot from Modern Tech.

As cryptocurrency continues to dominate headlines, more investors are pouring cash into ICO schemes in the hope of turning a quick profit. And with more than 150 scams listed on popular website Deadcoins, it’s easy to see how inexperienced ISO investors are being suckered.

The losses have become so prevalent that the US Securities and Exchange Commission (SEC) launched its own ISO scam in a bid to show investors how easy it is to set up such schemes.

The top ten biggest ICO scams to date

Scam name Amount of money scammed ($)
Pincoin and iFan 660,000,000
Plexcoin 15,000,000
Bitcard 5,000,000
Opair and Ebitz 2,900,000
Benebit 2,700,000
Bitconnect 700,000
Confido 375,000
REcoin and DRC 300,000
Ponzicoin 250,000
Karbon 200,000

Despite the SEC warning that ICOs “bring an increased risk of fraud and manipulation” due to the lack of regulation, the number of ICOs as well as the amount invested has increased over the past year.

In 2017 $6,240,046,555 was raised across 371 ICOs. However, in 2018 a staggering $20,074,423,238 has been raised across 789 ICOs to date.

This reveals a 222% increase in the amount raised in 2018 so far, compared to the full year of 2017. Additionally, there is a 113% increase in the number of ICOs in 2018 so far compared to 2017.

If Satis Group’s suggestion that almost 80% of 2017’s ICOs were identified scams is correct, 297 ICOs in 2017 may have been fraudulent. If this trend was to continue in 2018, 631 ICOs could be fraudulent.

Despite such shocking statistics, ICOs remain a relatively popular investment in 2018, with $20.1 billion being invested into ICOs so far.

The amount invested in ICOs in 2018 to date

Month Money invested ($)
January 1,985,750,821
February 1,660,013,613
March 4,173,112,271
April 1,268,948,460
May 1,985,596,961
June 5,778,213,703
July 809,577,207
August 989,375,043
September 1,423,835,159

So, what are the red flags that may alert you to an ISO scam? The following were present in the most high-profile incidents:

  • Silence from companies when contacted by investors
  • Lack of a whitepaper and inconsistencies on the ISO website
  • Fake Linkedin Profiles of “the team” with stock images or stolen photos
  • Any text humourous or otherwise outlining a scam
  • Promise of fixed profit or guaranteed ROI

Updated on

Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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