Initial Coin Offering (ICO) is a great way to raise enough funding to bring an innovative idea to life and enrich participating investors. Relatively quickly created funds is also drawing the attention of people who are not really into building something for the future but, well ... there is no polite way of saying it: Many scams disguise themselves within the ICO world, taking the trusting public for all they have and then disappearing without a trace.
Crypto community is not unfamiliar with news such as of late July when the Vietnamese mining farm boss, disappearing with $35 million of raised money. So we have prepared a compilation of ICO scams to save in your bookmarks as a reminder, that sometimes (especially in a crypto sphere) things are not always what they seem.
July 2018, Vietnam, Sky Mining, $35 million lost
End of July 2018, a boss of the Vietnamese mining farm ‘Lê Minh Tâm’ disappears with $35 million. Company closes its office and when investors visit the factory they see that all 600 mining rigs have been taken away. Tâm claiming that he is getting medical treatment and that he will be back soon, however evidence shows otherwise. Later on, Facebook Tâm stated that he is staying away from the public to protect his life.
May 2018, China, Pu’er Coin, $47 million lost
This one’s about tea, a very valuable fermented tea produced in Yunnan province, China for Tibetan consumption. Six ‘entrepreneurs’ came together and claimed to back the token with shares of tea. Partners offered large profits in very short terms promoting their project on social media and luxurious road shows. In 2017 Pu’er coin was manipulated by the founders in order to raise its price. Their story ended when they escaped with investors money and were subsequently caught in a hotel room by the police.
March 2018, South Africa, BTC Global, $50 million lost
Let us first give you this piece of information which is a message from the current BTC Global website: “Until Steven Twain resurfaces or is found there is nothing the admin team can do.” Ahh, a classic Ponzi scheme. First BTC Global offered extremely high ‘guaranteed’ weekly returns of 14%, just imagine that! Its main selling point was the ability and skill of its leading trader Steven Twain, who doesn’t exist according to some of the victims. There are many reports on the case, which mostly recommend suing other partners of the company.
June 2018, Turkey, Turkcoin, $211 million lost
Currently, both of the founders of Turcoin are behind bars. Muhammed Satiroğlu and Sadun Kaya had launched Turcoin in 2018, posing as the ‘national cryptocurrency’ of Turkey. Investors were drawn to extravagant public meetings to which celebrities were invited and to see company executives being gifted luxury cars. Sadun Kaya claimed that he owned 8000 bitcoins not long before he disappeared with investors’ money, once the government launched an investigation. Turcoin turned out to be a Ponzi scheme where investors were promised extremely high returns. After the opening of the investigation, monthly payments to investors stopped and founders fled.
June 2018, Blockbroker.me, ~$3 million lost
Now this one is good, face/off kinda story.
First of all, Blockbroker was based on a platform to combat ICO fraud by creating a 100% safe investment environment. Supposedly people could have spotted the scam from a mile away since their whitepaper was almost empty and didn’t have any reliable information about their team. The first flag was the offline site which was down for “maintenance” for a very long time. Later a Reddit user found out that the CEO of the company John Jacobs has the same profile photo to a Ukrainian photographer Alexander Krishtal (a.k.a Alex Amadea)
Insider.pro covered this story earlier and fruitlessly tried to reach Mr. Krishtal. Luckily Mr. Krishtal, who became the face of this scam replied after almost three weeks and gave his comments exclusively to Insider.Pro. Alexander says that he was unaware of the ICO in question but he was contacted on several occasions about a photo on his profile page.
Here’s a part of the conversation:
“I remember, I was contacted and told to delete the photo, around half a year ago.” said Mr. Krishtal “I get 5-10 fake messages on freelance every day. But I deleted the photo for a week or so, but then put it back up. I thought that why should I care, it's my photo. I just didn’t want to get into all of this.”
Insider.pro: And they gave you money for this?
“They did, or even send $10. All I remember is that I told them mildly to go away when they asked me to make a photo with some code on it.”
Insider.pro: Are you planning to do anything about this?
“I don’t think that I will do something about it, as you said, only the photo was stolen.”
Regardless of the shock, Alexander still thinks that cryptocurrencies are the future and admitted to investing in a few litecoins (BITFINEX: LTC/USD.BITFINEX).