Investors Have Placed $1 Billion in Cryptocurrency Offerings Rampant With Red Flags For Fraud (cnbc.com)

Investors have sent $1 billion into digital coin projects that flash warning signs for fraud, The Wall Street Journal reported Thursday. The revelation comes a day after the SEC created its own fake ICO to teach investors a lesson. From a report: In a review of 1,450 digital coin offerings, the Journal said it found 271 bore red flags such as plagiarized documents or fake executive information. Investors have already claimed losses of up to $273 million in these projects, the newspaper said, according to lawsuits and regulatory actions. The coin sales, or "initial coin offerings," give investors the chance to buy into a new digital token while letting developers get easy access to funding. The process may be a little too easy for many projects that are unproven or outright scams.

Coin offerings have raised roughly $9.8 billion in the two years through mid-March, according to financial research firm Autonomous Next. The Journal found widespread plagiarism in 111 projects' online whitepapers, including word-for-word copies of marketing plans and technical features.

Comments

Oh yeah?

[DontBeAMoran]

Well I'll make my own scam coin! With blackjack and hookers!

Re:Oh yeah?

[Nidi62]

Well I'll make my own scam coin! With blackjack and hookers!

I will gladly buy 100 Nixonbucks worth of your Bendercoins. Much better than buying 100 cups of coffee.

What tipped you off?

[mcmonkey]

In a review of 1,450 digital coin offerings, the Journal said it found 271 bore red flags such as plagiarized documents or fake executive information.

The article continues...

"The Journal found the other 1179 offerings bore red flags such as THEY WERE DIGITAL COIN OFFERINGS."

Seriously, if you ever thought the story of Jack and his magic beans was fiction, just look at these digital magic beans.

"As seen on TV"

[Rick Schumann]

More and more all these various 'cryptocurrencies' are starting to remind me of the 'limited edition gold coins' and 'collectible coins' sold on the x.2 and x.3 (and so on) broadcast TV channels. They're not really worth more than the metal they're made out of but they try to convince you they're going to be worth orders of magnitude more than you're paying for them.

Re:"As seen on TV"

[tlhIngan]

More and more all these various 'cryptocurrencies' are starting to remind me of the 'limited edition gold coins' and 'collectible coins' sold on the x.2 and x.3 (and so on) broadcast TV channels. They're not really worth more than the metal they're made out of but they try to convince you they're going to be worth orders of magnitude more than you're paying for them.

Actually, a lot of them are real. Just you can buy them from the Fed for about 1/5th the cost normally. They are only "collectible" in the sense someone paid a lot of money to make an ad for them thinking you can only get it from them. But your local bank should be able to order in a roll for you for basically face value (they may be gold coins, but the gold content is nowhere near their face value). So the ad might sell you a roll of 20 $1 gold coins for $100 as "collectible" (they are limited - once the feds stop pressing, they're no more). Or you bank can get them for $20 or so.

Of course, it also plays on the "limited" part and "collectible" part. Just because something is limited, rare, or collectible, doesn't make it valuable. After all, the Fed just prints a new coin the next year and the scam repeats again.

Fools and Money

[Zorro]

You don't have to be smart to be Rich.

But it helps if you want to keep it.

Re:Fools and Money

[PolygamousRanchKid]

But it helps if you want to keep it.

It's a great tax savings plan:

Set up your own scammy ICO in a fake name.
Buy it all up yourself.
Transfer the cash to the Cayman Islands.
Reveal the ICO to be a scam, and claim the losses on your taxes.
Profit!

I have this terrible feeling in my gut that all this speculation will incite yet another banking crisis. In order to avoid complete devastation, the government will do a bailout.

Guess who gets to pay for the speculators losses . . . ?

Re:Fools and Money

[slew]

But it helps if you want to keep it.

It's a great tax savings plan:

Set up your own scammy ICO in a fake name.

Buy it all up yourself.

Transfer the cash to the Cayman Islands.

Reveal the ICO to be a scam, and claim the losses on your taxes.

Profit!

I have this terrible feeling in my gut that all this speculation will incite yet another banking crisis. In order to avoid complete devastation, the government will do a bailout.

Guess who gets to pay for the speculators losses . . . ?

People were using this tax scam long before ICOs...

To partially counteract this, the IRS limits passive loss write-off to at most the passive gains you report in a tax year. This means you could avoid paying about 1/2 the taxes on your legitimate investments in the best case...

Why 1/2? Because you could taken that money you used to declare a loss and invested it in your actual investments and presumably doubled the gain.

oh the inhumanity

[Kulahan]

oh no people that are investing in something they don't understand at all are getting screwed over as a direct result of their lack of knowledge

The World's Largest Pyramid Scheme

[Anonymous Coward]

"It's not a pyramid scheme, Frank! It's an inverse wealth funnel!"

All cryptocurrencies and ICOs are scams

[Anonymous Coward]

Are (any) fiat-currency and (any) cryptocurrency really equivalent, as cryptocurrency fans claim?
For example, US Dollar and Bitcoin are really equals?
Value/validity/authorization of US dollar is provided/guaranteed by US Government (and in-turn whole US Public)!
Also, not to mention, US Dollars in any US Bank is insured by US Government!
What authorization/guarantee/insurance is behind Bitcoin? Nothing!
Sorry but that is the end of discussion then!

Why do you think Satoshi Nakamoto is really hiding his identity, if Bitcoin is really such a great innovation?
He is just someone does not like media/fan attention?
Or, could it be really because Bitcoin (and all cryptocurrencies followed it) are actually Ponzi Schemes?
(So he knew very well that law enforcement would come after him sooner or later?!)

If so-called cryptocurrencies are really good innovation, why they attract so many criminals/criminal activity?
Could it really be because, all cryptocurrencies themselves are scams, and that is why they attract all kinds of criminals/criminal activity?

If so-called cryptocurrencies are really currency, why no company/store can use Bitcoin as currency anymore?
Because the price of Bitcoin proved to be extremely unstable to use as a currency?
Would the result be different, if Bitcoin replaced by any other "cryptocurrency"?
Aren't all work the same way?

If so-called cryptocurrencies are really money; isn't people issuing their own money, illegal already, in all countries?
If so then, why they are still not banned in all countries?

Or, they are not actually virtual currency but virtual investment?
But, if they are actually investment, why we need/want them?
What would happen to world economy, if people invested in virtual investments, instead of real investments?

Or, all so-called cryptocurrencies are actually just a modified (made decentralized and paying variable interest) Ponzi Schemes?
(Price of cryptocurrencies would keep increasing in the long term (by their design), so it is equivalent of paying variable interest to all long term investors.)

As more and more people invest in cryptocurrencies, it will become harder and harder to ban their trading everywhere!
All cryptocurrencies need to be banned globally before it is too late!

Re:I have an inital tulip offering

[pegacat]

Too Late, it's been done - check out 'TulipCoin' at https://tulipcoins.github.io/

PonziCoin was also very 'successful'.

It seems to be at the stage where the fish will bite on bare hooks, with no bait, and a large sign attached saying 'warning, this is a hook'.