The rising market competition, new world regulations and investor overfed with scam projects and ideas had led to the point that most of ICOs tend to fail more and more times. As the market is already overwhelmed with the blockchain-based solutions and countless fraud attempts looking like the new industry solutions. Due to the latest statistics, there are already more than a thousand cryptocurrency projects that actually ceased to exist.
The analytical data provided by the DeadCoins and Coinopsy suggests that among such projects, ones can be found which show directly no hints of any planned developments or future activity in its protocol. The crypto coin cemetery is filling up despite to the market experiencing a specific cooldown since the last year. The Dead Coins lists around 800 tokens which are out of the game for now, while Coinopsy estimates that more than 1,000 that had met their infamous fate.
Fewer than 4 percent of ICOs with market caps of $50 million to $100 million was successful or promising, according to a March analysis from ICO advisory firm Satis Group. Most ICOs were raising money without having an experienced development team or an actual product, just white papers studded with promises.
At the moment, the blockchain startups are faring worse than their counterparts in other industries. Going back in the past, in 2013 and 2014 precisely 103 companies received initial seed or angel funding in, but only 28% percent managed to raise additional financing, according to CB Insights’s report. For comparison – that number went up to 46 % of the 1,098 tech companies that raised a second round in the U.S. between 2008 and 2010. Among tech companies, 14 % went on to a fourth round, while only 2 percent of the blockchain companies did, the researcher found.
Such projects as BRIG, for example, represent the pure scam aimed to lure out money from its investors’ pockets. It goes way worse after that with the numerous fraudulent project such as one of the brothers Jack & Jay Brigov and Titanium for a fact. By the way, the latest one is an investigation which is being handled by the Securities and Exchange Commission USA (SEC) itself. Other latest scams worth mentioning are the CryptoMeth, Droplex, OreoCoin, and Roulettecoin.
Noteworthy is the amount of money wasted – the average amount of money stolen or lost due to these ICO projects gets close to several billion dollars of investment.
Even even though up to this points, numerous legislative acts had been issued in many countries, financial regulators which continuously check the issuers of tokens for legitimacy, the overall amateurness of investor’s approach often neglect one basic rule. Before investing in any suspicious activity which requires an initial project analysis at least, try not to invest all the money you have hoping to get huge profits sooner or later by reaching millions of dollars in extremely questionable projects.
Another enormous problems of ICOs are their either incompetent or openly fraud teams. The widespread disappearance of project authors took part quite often last year mostly – after getting the astronomic amount of investment into “innovative projects or platforms” on their assets globally, CEOs one after another started to disappear alongside with their bags of money flying off to offshore zones or private islands, having their future secured and backed by bankrupt investors.
Numerous exciting stories and legends about website malfunctions or the sudden “death” of developers count here as well.
Hackers and cybercriminals represented another common threat, which affected even the decent projects and their teams. That includes the direct strike on initial coin offering campaigns while the token sale stages, wallets and exchanges hits and more, which resulted in both investors and project creators suffering from this activity.
However, earlier this month, SEC chief Jay Clayton said that his agency’s fight against fraudulent ICO is just beginning. At the same time, companies that raise funds through sales of digital tokens should not have any illusions and think that the government will treat them differently than to firms participating in the traditional securities market.
The previous results of the Satis Group study indicated the amount of $ 1 billion collected by the fraudulent ICOs in 2017. Out of the thousands, 271 projects had issues with the White Paper plagiarism, either had employees who pretended to be somebody they are not or had another vicious indicator of fraud activities.
Moreover, an additional study conducted after had shown that only 8% of the tokens after ICO were able to get listed on the well-reputable exchange.
No doubt, we are about to see a lot more abandoned ICO that never make it to exchange and overall ICO investments may become unprofitable. Due to CoinSchedule info, ICOs have raised $11.75 billion only during 2018 up to this point.