New Study Finds that Nearly 78% of 2017 ICO Projects were Scams

New Study Finds that Nearly 78% of 2017 ICO Projects were Scams

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July 13, 2018 by Ian Moore
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  More than three-quarters of ICOs launched to date are nothing but fraudulent schemes, according to a new report. The study from Satis Group, which forms part of a five-entry series analyzing the state of the cryptocurrency ecosystem, revealed that the vast majority of ICO projects were “identified Scams”. According to the report, nearly 78%
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More than three-quarters of ICOs launched to date are nothing but fraudulent schemes, according to a new report.

The study from Satis Group, which forms part of a five-entry series analyzing the state of the cryptocurrency ecosystem, revealed that the vast majority of ICO projects were “identified Scams”.

According to the report, nearly 78% of the ICO projects had no intention of fulfilling project development duties with funds and was deemed by the community to be a scam.

“On the basis of the above classification, as a percentage of the total number of ICOs, we found that approximately 78 [percent] of ICO’s were Identified Scams, ~4 [percent] Failed, ~3 [percent] had Gone Dead, and ~15 [percent] went on to trade on an exchange,” the report states.

A recent study by a team from the Boston College similarly concluded that more than half of the token projects they examined fell into inactivity within four months of the sales.

Yet in terms of the actual dollars that have gone into ICOs, Satis found that just 11 percent of funding went to those it identified as scams, or about $1.7 billion. That figure actually drops to a minute 0.3 percent when you cut out the three biggest scams – Pincoi, Arisebank and Savedroid – that have been identified.

With the increasing rate of fraud in cryptocurrency industry, many investors have called for more stringent rules in allowing businesses tokenize assets. With the US regulators clamping down on these scammers, Statis detailed the number of projects that are shifting to friendlier regulatory environments.

The report noted that the number of ICO fundraising projects based in the Cayman Islands rose from a reported 3% to 40% in the last year while the U.S. faced a sizeable drop from 32% to 10%.

Hinting to subsequent reports yet to be published by Satis Group, author Sherwin Dowlat wrote that a more comprehensive analysis into the “wide variety” of regulatory approaches taken by states within the U.S. specifically would be provided “in a subsequent note.”

 


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