WSJ Analyzes 1,450 ICOs, Flags 271 as Scams

More than $1 billion has been poured into ICOs where the Wall Street Journal ‎‎identified red flags‎.

According to research conducted by the Wall Street Journal, around 20 percent of ‎initial coin offerings (ICOs) are merely pure scams, with many others more ‎likely to fail.‎

The WSJ team came to its conclusion after analyzing 1,450 digital coin ‎offerings, of which 271 were red-flagged on the basis of various ‎parameters, such as “plagiarized investor documents, promises of ‎guaranteed returns and missing or fake executive teams.”

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So far, more than $1 billion has been poured into ICOs where the Journal ‎identified red flags, despite the fact that it’s nearly impossible to know ‎which ones will survive. ‎

To do their work, the group of researchers reviewed the startups’ statements ‎and online transaction records. The research shows that 25 of ICOs can be ‎labeled scams right now as they claim guaranteed returns on investments, a ‎common fraud tactic and something the SEC prohibits. The risk-free ‎investments, however, lure many ICO investors who are drawn to the idea ‎that their token will post bitcoin-like gains.‎

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Additionally, at least 124 of these projects had faked or concealed team ‎members. More specifically, the ICO operators didn’t disclose their listed ‎team members who either didn’t appear to exist or were impersonating identities ‎of other people who told the WSJ that their photos were used without their ‎knowledge.‎

Other red flags included characteristics that are common to fraudulent ‎offerings, such a white paper with a complex yet vague explanation of the ‎investment opportunity, promises of financial rewards without any risk, ‎unresponsive websites with only a countdown clock that shows time is ‎running out on the deal of a lifetime.‎

Of the projects listed on the report, 111 offerings were sharing a duplicate ‎language with entire sections word-for-word were copied from other white ‎papers. These included copied descriptions of the working product and ‎roadmap, security issues and some technical features.‎

These findings are nothing new in the world of digital token sales. The ‎U.S. Securities and Exchange Commission (SEC), along with other ‎regulators across the world, have been cracking down on ICO fraud.‎

The US top regulator repeatedly warned investors against throwing money into the virtual ‎crowdsale because the company intended to launch a cryptocurrency-based ‎‎investment scheme without even attempting to follow US securities laws.‎

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