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Investors Have Lost Nearly $100 Million on ICO Exit Scams

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Investors Have Lost Nearly $100 Million on ICO Exit Scams

A new study has found that initial coin offering (ICO) exit scams have already cost investors worldwide nearly $100 million.

The research report, published by Diar on August 13, collected data on ICO exit scams and found that a total of $96,811,400 had been stolen as a result of this type of fraud. The three largest scams were perpetrated by NVO, which stole $8 million, Cryptokami which ran off with $12 million, and the Shenzhen Puyin Blockchain Group, which ran three separate ICOs - ACChain, Puyin Coin, and BioLifeChain - and took $60 million from investors before attracting the attention of the State Market Regulatory Administration (SMRA).

The scams by NVO and Shenzhen Puyin Blockchain Group, which raked in about $68 million, accounting for the lion’s share of the total stolen in ICO exit scams, occurred during the first two weeks of August.

One exit scam identified by the report even billed itself as a service for preventing scams. Organizers of Block Broker conducted an ICO to fund a platform they claimed would “completely eliminate ICO fraud,” which enabled them to scam investors to the tune of $3 million.

“Unsurprisingly, blatant exit scams continue to plague the largely unregulated ICO sector, where founders have no contractual obligation to deliver a product. After raising millions of dollars with no strings attached, the founders’ incentives to actually build a valuable company are very limited.”

However, the report notes that, “with proper due diligence, the most blatant exit scams are not hard to pick out.” ICO investors should stay alert for red flags, “such as plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams.”

13 Aug 2018

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