Over the short history of the ICO, there’ve been many big scam campaigns: one deleted all the pages of their website, leaving obscene or mocking expressions on the main pages. But now scammers have begun to be caught: for example, the creator of PlexCoin project Dominique Lacroix was recently detained and will soon be punished: a few months in prison and a small (relative to the stolen amount of money) $100.000 fine.
Related: First ICO approved in France
So here we want to show you the most famous scam ICOs, what they have done and how much money was stolen.
DeClouds collected 300 BTC ($1.2 million). The purpose of the project was the creation of a platform for the production of tokens, whose value is provided by precious metals. The project attracted the attention of the crypto community due to the promised platform speed. Accordingly, operations in the cloud should have been almost instantaneous.
Analysis of the documentation showed that the white paper of the project was a collection of unrelated blocks of information. The team created fake social media accounts and even announced a partnership with UBS, a Swiss bank (they even provided a photo). But the picture was fake. Only bank employees were present in the photo, and the DeClouds team was added using Photoshop.
The economy of the token was also suspicious with the exception of the provision of digital currency with precious metals, coins didn't have any functions. The token of an interesting and viable blockchain startup should be something more than a fundraising tool. It is worth noting that now such a scheme would work with much less likelihood. But there were only 2016s, so such cases of scam due to the novelty of the industry were much more likely.
Eros.vision collected 7400 BTC ($29 million).
The project goal was in making a decentralized marketplace of the adult industry. The project proposed to simplify the purchase and sale in the controversial sex industry. Decentralized service guaranteed complete anonymity, which is especially necessary for users of this industry. It is another high-profile case of fraud in the history of ICO campaigns. When asked about the legality of such a project, the developers responded that paying with tokens would help to avoid accusations of prostitution: “no money, no guilt”. Users were seduced by the prospects of the project: the sex services market is really huge. Another thing is that in most countries it is still illegal.
Everything was fake, right up to bitcointalk accounts and team biographies. Even the domain was purchased a week before the initial placement of coins. The scammers first reported problems with the domain and shifting the start date of the project. After that, they completely stopped their activities.
iFan and PinCoin
One of the largest ICO scams was “organized” by Modern Tech. It managed to twist ~30.000 investors around the finger through 2 projects at once: iFan and PinCoin. As a result, Modern Tech’s guys were able to steal about $660 millions in total.
iFun, as stated in the ad, was supposed to become a social network for celebrities who would share content with their fans for a fee.
PinCoin promised a return on investment of 40% per month. The project guaranteed the creation of an online platform that will include an advertising network, an auction and investment portal, and a peer-to-peer marketplace. And all this will be, naturally, on blockchain technologies.
All this was, of course, wrapped up in a beautiful package of modern design, animation, compliance with ICO rules. Take in the white paper, legal regulation's link. Clever words and documents on 43 pages. 23000 (investors) what could be from this. The website of iFan even now works, but, unfortunately, you can no longer admire PinCoin's one.
Opair collected 1500 BTC ($6 million). It is considered as one of the first major cases of scam as ICO project.
The idea of this ICO project was the creation of decentralized debit cards. So users could buy goods and purchase services using bitcoin, ethereum and etc. Crypto would come in everyday life. Users were offered a high transaction rate, and a crowdfunding platform to raise funds for any innovative idea that requires a large number of resources.
As its developers noted, it would be a revolution in the banking sector by issuing a debit card with the possibility of decentralization. The fraudsters collected $1,000,000 (at an exchange rate of 2016) and vanished as they were ghosts, deleting social network accounts. After some time, Opair's staff tried to do the same trick again, but this time the crypto community was much more careful: the scammers used the same IP as then.
Authorship collected 232 BTC ($930 thousand).
The goal of the project was a decentralized platform connecting writers, translators, and publishers. The developers promised the possibility of fast monetization of the activities of beginning literary figures and a simple solution to the problem of copyright in the field of literature.
The project seemed very attractive because of the good bounty campaign. However, before distribution, the developers changed the rules for obtaining tokens, due to which 80% of investors didn't receive anything. Suspicions began with an online bookstore, which should be used for gaining a wealth of experience in communicating with authors and publishing houses. The store practically wasn't functioning. The address that the team indicated in the documentation was also rented by another company.
Always be careful if you want to make an investment in a project. Check any existing information. Remember: names can be made up, photos - photoshopped, and hiring a programmer to assemble a website in the 21st century is not the most difficult task. You can also read our article on how to understand that project is a future scam, or find more information in our explanatory article about ICO to get a deeper knowledge of this topic.