Nearly 80% of 2017’s initial coin offerings were scams

July 13, 2018
Chris Wheal

A study published this week suggests that nearly 80% of initial coin offerings (ICOs) launched in 2017 were scams.

Satisgroup identifies nearly 80% of 2017’s ICOs as scams

Satisgroup, which carried out the research, said that while 70% of genuine ICO funding by dollar value went on to higher projects, 78% of the total number of ICOs were identified as scams.

While this appears dramatic in number, only around 11% of ICO funding – about $1.3bn – went to identified scams. Of this $1.3bn, the vast majority was from just three projects: Pincoin, where $660m was raised; Arisebank, which took $600m and Savedroid, about $50m.

Biggest scams

Satisgroup categorised a scam as any project that expressed availability of ICO investment – through a website, social media posting etc – that had no intention of fulfilling project development duties with the funds, or was deemed by the crypto community to be a scam.

 

Arisebank’s ICO was halted by the US Securities and Exchange Commission (SEC) in January with an asset freeze and ongoing legal proceedings with the SEC.

Savedroid, a Frankfurt-based ICO, was reported in April to be under investigation by the local public prosecutor, while Pincoin was under similar scrutiny by authorities in Vietnam.

Scams identified by community

Outside these three, just $30m was lost to scams.

“We hypothesize this is because the community is relatively adept at discovering scams and adding them to lists,” the report suggested.

The remainder of ICOs were not all successful. Outside the 78% of scams, a further 4% of offerings failed to make their soft caps and funds were returned, while 3% were classified as “gone dead” – succeeded to raise funding but not listed on exchange.

Successful ICOs

But by dollar value, the vast majority of ICO funds raised in 2017 – nearly $8.3bn – went to projects the researchers categorised as either successful or promising.

“This is a very positive story and a direct contrast to the outcome when you look at the percentage of successful and scam projects on a per numbers basis,” the report concluded.

 

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

Related News

OL DEX is closing all activities April 25, 2020
USDT (ERC-20) Gateway Enabled April 17, 2020