The Wall Street Journal just released its findings from its look into 1500 initial coin offerings (ICOs) May 17th. The report concluded that 18.6% of them raised red flags.
In their analysis of the booming ICO market, the WSJ warned that some ICOs were using deceptive and even fraudulent tactics.
These tactics include hiding or providing fake information about the issuing company’s location and leadership to secrecy about finances and even plagiarizing whitepapers.
Some of the bad actors have already been shut down, resulting in investors attempting to recoup an estimated $273 mln in lost funds. The US Securities and Exchange Commission (SEC) has resolved to closely monitor the US market for bad actors, to ensure investor safety.
The ICO as a fundraising tool has caused debates, dividing opinion both inside and outside the crypto industry.
Danny Masters, CEO of Coinshare remarked that improvements to the ICO arena were an essential step in allowing Bitcoin markets to grow.
Earlier this month, Zhao Changpeng, CEO of crypto exchange titan Binance, released a blog post that praised ICOs, investing in which he described as “100 times easier than through traditional VCs.”
“Scams exist everywhere, in every industry,”
he wrote on the topic of illegal offerings.
Zhao concluded that:
“I still receive phone calls and SMS telling me I won a grand prize, but I need to make a bank transfer to someone first. Does that mean we should stop using phones, SMS, and banks?”