According to this news I read, is this the end of of ICO? Kindly read through and give your opinion
The cryptocurrency industry may be maturing, but that doesnt mean its likely to shed its reputation as a playground for scam artists anytime soon.
Thats according to a report from Diar, which found that ICO exit scams have now cost investors nearly $100 million.
The majority of these stolen funds, an estimated $68 million, has been raked in by exit scams that have occurred during the first two weeks of August. The largest, allegedly pulled by the China-based Shenzhen Puyin Blockchain Group, raised $60 million from three separate ICOs before attracting the attention of the State Market Regulatory Administration (SMRA)
n another particularly morbid exit scam, the organizers of Block Broker, an ICO intended to fund the development of a platform that would completely eliminate ICO fraud exit scammed investors to the tune of $3 million.
In its report, Diars researchers attribute the proliferation of exit scams to the structure of the token sale fundraising model, arguing that it creates misaligned incentives.
They wrote:
Unsurprisingly, the blatant exit scams continue to plague the largely unregulated ICO sector where the founders have no contractual obligation to deliver a product. After raising millions of dollars with no string attached, the founders incentives to actually build a valuable company are very limited.
As Diar notes, the amount of funds lost to ICO exit scams is particularly bizarre considering how easy they are to spot when conducting even a moderate amount of due diligence. Many, for instance, use plagiarized whitepapers and fake profile pictures. One project famously used a picture of Ryan Gosling for its fictional graphic designer, while another featured a fake testimonial attributed to an image of Jennifer Aniston.
Nevertheless, fraudulent projects, including those that use other tactics than straight-up exit scams, continue to attract hundreds of millions of dollars from investors, often by using FOMO to trick them into acting against their better judgment.
Even supposedly above-board projects have used the hoopla around exit scamming to accrue media attention. As CCN reported, one startup Savedroid, which raised $50 million from its ICO and other funding sources executed a fake exit scam in a controversial publicity stunt apparently designed to drum up interest in an ICO advisory service that the project was launching.