Study: 80% of ICO 2017 found to be fraudulent
Consulting company ICS Statis Group conducted a study on primary token allocation (ICO) projects launched last year. In their opinion, 81% of the companies that conducted ICO in 2017 attracted investments fraudulently, since they are not going to develop the blockchain direction.
ICO frauds are more than bona fide projects
The crypto-financial community has more and more reasons to take a sober look at the consequences of last year’s crypto hype. The ICS Statis Group studied more than a hundred blockchain projects that entered the market in 2017, and concluded that 81% percent of them are deception. The researchers called scam projects to those companies that entered the ICO without planning to develop a cryptocurrency direction.
Despite the fact that most of these projects, the report notes that they managed to attract only 11% of the funds invested in the ICO last year. Pincoin (attracted $ 660 million), Arisebank ($ 600 million) and Savedroid ($ 50 million) are among the “leaders” among the fraudsters. In total, according to the Statis Group, the damage from fraud was $ 1.3 billion.
Trend for investment in cryptocurrency projects continues
The first ICOs were held 5 years ago, but this method of attracting funds received the greatest popularity in 2017. Then, in October, RBC journalists reported that the amount of funds raised by ICO was three times higher than last year’s figure. Despite the existing fraud on the market and other risks associated with investing in startups, investments in ICO continue to grow.
The profile portal Hacked.com reports that, in various sub-projects, the projects that entered ICO in 2018 have already raised from $ 6 to $ 13.7 billion. At the same time, sales of tokens do not correlate with the downward trend in cryptocurrency costs. According to the consulting company PwC, the study of which shows the figure of $ 13.7 billion, cryptocurrency funds are now being re-circulated when purse owners use them to continuously finance new projects.
Investments in ICO continue to be risky
While buyers of tokens are not sufficiently protected by the law. Therefore, in order not to lose money, they must independently carry out the work of the regulatory authorities: to check the reliability and viability of projects seeking investment.
The business media are advised to study the team’s reputation, the degree of elaboration and realization of the idea, the roadmap and the conditions for the sale of tokens and coins. Even when, after verification, it seems that the risk of fraud is eliminated, there is always the possibility that the company will not raise enough funds or fail like the overwhelming majority of startups.