ICO exit scams robbed ordinary and hard working people around the world out of $11.9 billions in 2017 alone. A study by Bloomberg uncovered that more than 80% of ICOs were or are scams. The people behind the malfeasance are often have a long list of criminal records hidden in plain sight.
People doing ICO exit scams often have criminal records
For instance, the founder behind Dorado‘s $23 million dollars ICO exit scam, Jonas Karosas has a rap sheet longer than Monaco.
Jonas Karosas spent time in federal prison for bribing and money laundering. However, no one dug out and exposed his criminal pass until it was too late. Less than 1 month after $23m was raised at Dorado.tech (offline), the majority of team members either disowned the project or vanished without a trace.
A quick Google search of some of Dorado’s team members revealed a network of scams. Some are wanted for tax evasion, money laundering, and more serious crimes.
They are known for exploiting businesses in the food industry in Lithuania and other European countries. Although a relationship was never established or confirmed, Karosas claimed to have formed a partnership with local food delivery service company, FoodOut.
The team even posted statements, images, videos and co-branding pictures of FoodOut on Dorado.tech to make the partnership look legit. The food takeout company had to disable it’s social media and external pages due to threats and negative reviews.
The #1 overlooked common denominator of all ICO exit scams
CryptoZink evaluated a number of ICO exit scams and found a great deal of advertising budget went or goes to YouTube bumper ads.
Instapage describes YouTube bumper ads as follow:
“YouTube’s bumper ad is a six-second, unskippable video ad that plays before a YouTube video. It is one of YouTube’s six different advertising formats. Due to their short length, bumper ads are best for creating brand awareness and reach.”
Google’s own YouTube bumper ads research studies:
“Google found that 70% drove a significant lift in brand awareness, with an average lift of 9%. Additionally, 9 out of 10 drove ad recall globally, with an average lift of over 30%.”
Are initial exchange offerings (IEOs) the new ICO in disguise
While cryptocurrency has and continues to create new millionaires around the globe, many have fallen victim to get-rich-quick schemes, greed and criminal mischief.
After Initial coin offering (ICO)’s funds raising method become too much to bear for investors and project owners, a new kid entered the block; Initial Exchange Offerings (IEOs).
Although new, many crypto experts see the IEO concept as nothing more than ICO with another name. Just like ICOs, IEOs offer nothing valuable other than promises to make you rich.
They are backed by nothing other than the promise to be listed on the same exchange conducting the IEO’s fundraising campaign. Most likely the IEO’s own exchange. In essence, these projects are raising money using tokens to fund other projects without giving investors ownership or equity.
The same hooks are used to lure old, as well as new investors into pouring money into crypto projects and tokens with little or zero use cases.
Examples of potential IEO / ICO / token exit scams
A perfect IEO example is Coinsbit’s native token, CNB. The token’s price may go to $0 and investors loose everything while the exchange is making its founders millions.
Ripple’s XRP is a very good illustration of a token exit scam. The pro-bank crypto firm has raised $14.75 million in traditional investment.
These investors are awarded equity in ownership in the Ripple; the company. However, but investors in Ripple’s XRP tokens get zero projection.
The company can decide any day to discontinue XRP; the token while Ripple; the company brings in billions for its traditional investors.
Mathieu is a Information technology professional with over 15 years of experience. He started one of the first bitcoin blogs existed in 2010. He started writing about, investing in bitcoin and promoting the first cryptocurrency when only a few technological savvy people knew about it. Mathieu is a world traveler who enjoys culture, technology, finance, salmon, rice and beans. He’s cool, collected and knows a great deal about blockchain technology.