The initial coin offering (ICO) space has been fraught with risk over the last 12 months as the sheer number of companies conducting the sorts of offerings has increased dramatically and – with it – the potential to conduct quick and easy fraudulent activity.
To reduce such risks, the Chinese government took steps to stop ICO’s with free start up coins some months back but still, more and more ICO’s are getting launched daily.
What is ICO and why you should be careful
An Initial Coin Offering (ICO), also called an Initial Public Coin Offering (IPCO) is defined as an unregulated means by which funds are raised for a new cryptocurrency venture. It is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks.
We have seen a number of ICO’s conducted as part of which multiple million dollars have been raised for seemingly good projects but, subsequent to issue, the companies in question have reportedly gone “dark” and failed to execute on any of the milestones presented in the white paper that drew the initial investment.
Confido as an example
After a couple of days of communication regarding so-called legal issues surrounding the company’s operational activity, Confido has basically switched off the lights, shutting down all communication and removing its online presence entirely. There is no longer a website in place, no social media activity or historic activity available for viewing and – at the same time – the so-called founder has deleted his private Facebook account.
The guy in question is Joost van Doorn, who was registered as the company’s domain owner on Who.is at a residential address in Berlin. Of course, whether van Doorn is actually the person behind the seeming scam remains to be seen and (in all likelihood) won’t be revealed – at least not near term.
The token currently trades for essentially nothing, having dropped close to 97% in value on the back of the word of going dark hit press. The address to which the startup capital was sent has been cleared of its ETH in the entirety.
What you should do to avoid being scammed
Chances are this won’t be the last of this sort of activity that we see hit the ICO space over the coming 12 months or so. While regulation isn’t ideal, it’s seemingly necessary as a layer of protection against fraudulent activity going forward.
You as an individual also need to link up with an experienced friend or an expert in the cryptocurrency line to discuss about your investment in any new ICO for guiding and verifications!
Gratitude: BCC News