Initial currency offerings (ICOs) are a traditional way for companies and organizations to raise money and put their crypto-coins on the market. ICOs, however, follow the same unregulated pattern of the virtual currency market and therefore are subject to frauds.
According to a new study released last 11 by the Statis Group, an ICO consulting firm, no less than 78% of all initial currency offerings made in 2017 were identified as a blow.
According to the consultant’s own definition, fraudulent ICOs consist of “any project that expressed availability of investment via ICO (via the website, ANN thread or social media providing a contribution address) and did not intend to complete the development obligations with investors and was considered a coup by the crypto medical community.”
According to the study, 4% of the ICOs have failed (raising funds, but the project was abandoned, and investors were reimbursed), while another 3% “disappeared” on the way (they raised funds, completed the process but were not listed in exchanges or received contributions for three months on GitHub).
Not everything is flawed
Only 8% of the ICOs of 2017 were totally successfully raised funds, traded the currencies in an exchange and fulfilled the prerequisites evaluated by Statis (distribution in a public ledger book or platform; and activity on GitHub in the three-month period).
In addition, there are some that were successful even though they did not fulfill all the points assessed as required by Statis: 3% of the ICOs took crypto-coins to market but failed to meet one of the three prerequisites, and another 4% only compiled one or none of the prerequisites.
The scenario may seem gloomy, so there is always a warning that good valuations when investing in crypto-coins are essential to avoid major headaches and considerable losses of money.