More Than 15% of Crypto Projects Have Serious Red Flags: Wall Street Journal
According to new study by the Wall Street Journal, over 15 percent of crypto projects increasing capital through initial coin offerings (ICOs) have severe red flags which should give investors pause. The investigation, that examined the whitepapers of 3,300 cryptocurrency offerings and ICOs found in 2017 and 2018, discovered that 513 of these probably committed plagiarism, misrepresented the identities of project creators, or promised poor returns.
The Wall Street Journal analyzed the white papers of 3,300 projects that it found recorded on ICOBench.com, Tokendata.io, and ICORating.com. To determine plagiarism, the colleagues contrasted sentences in most of the accounts to locate duplication, together with colleagues identifying over 10,000 sentences which seemed more than once. The papers were searched to identify offerings at which no staff members were provided, and also the novel reverse image searched photographs to determine bogus team listings. Lacking or deceptive team, creator, or host details have been a red flag for illegal crypto projects and ought to be among the very first details a investor scrutinizes for precision.
To locate”improbable” promises of yields the whitepapers were key word searched for crucial advertising phrases like”high return” after which examined manually before colleagues decided that they had been an unrealistic”can not miss” opportunity.
Of those 513, over 30 are under scrutiny by regulators, and more than half of those project sites are inaccessible. Every one of the over 250 inaccessible sites was pinged electronically and checked manually.
Very few may be attained or opted to respond.
The Wall Street Journal outcomes are hardly surprising given other recent reports about the ICO marketplace and also the intense regulatory scrutiny, and raising steps, contrary to offerings. It is a fact that lots of ICOs have neglected, many businesses use a new financing model to establish less than plausible projects and, a number of different projects are judged scams.
Forrester Research recently discovered that many ICOs have fought to produce viable projects or prepare for a cryptocurrency bear industry.
More recently the SEC has called for international aid in continuing its authorities as many ICO patrons are situated out of the US but provide investment opportunities over the nation. The worldwide character of cryptocurrencies is inducing a similar problem in different areas. For your SEC, other recent steps including hitting actors who promoted ICO scams with penalties and other enforcement activities.