According to the latest report by the Satis Group, in 2017, 78% of all ICO’s conducted turned out to be fraudulent. Overall, investors are said to have lost around $1.7 billion, which is 11% of all the amount gathered by ICO’s. Most funds were stolen through Pincoin and Arisebank, at $600 million each alongside Savedroid with $50 million.
Fraud has become one of the top reasons for why the ICO market is in the decline. According to the report, another reason is the ambiguity surrounding the regulations. For example, some large projects have the American jurisdiction to launch their ICO’s elsewhere. As the result, the percentage of projects based in the U.S. has dropped from 32% to just 10% but rose in Cayman Islands from 3% to 40%.
From the beginning of 2018, ICO projects in the U.S. have gathered around $7 billion and currently the market is one fifth the size of the IPO, in the country. In late June it was reported that ICO’s have attracted around $14 billion dollars worldwide.
Why it is important
- Satis characterized fraudulent ICO’s as lacking in detail when it comes to details regarding projects’ white paper and any personal information on the team. 1. Report says theyt 4% of projects in 2017 have failed after being unable to gathering enough funds but returned the money to investors, while 3% have not reached the crypto exchanges.
In a recent research, Boston College came to the conclusion that most ICO’ fail in their first four months. To date, more than 4,000 ICOs have been conducted, raising a total of about $ 12 billion. But after the funds are raised, most of them go on to fail.