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REVEALED: 10 Biggest ICO Scams Swindled $687.4 million

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biggest ICO scams

Initial Coin Offerings are one of the most tempting investment options for those hoping to profit from the ever-evolving world of cryptocurrency. However, the lack of regulation has allowed ICO investors to become targets of sneaky schemes.

Though ICOs have snowballed, with more than 750 being invested in during 2018 alone, the number of scams has also steadily risen, with more victims of fraud falling prey to cryptocurrency criminals.

Following Satis Group’s revelation that approximately 80 percent of 2017 ICOs were identified scams, new data from Fortune Jack has found that just ten of the most high-profile ICO scams have swindled $687.4 million from unsuspecting investors.

In fact, Pincoin and iFan scam stole $660 million, with an estimated 32,000 investors falling prey to the money-making plot from Modern Tech.

As cryptocurrency continues to dominate headlines, more investors are pouring cash into ICO schemes in the hope of turning a quick profit. And with more than 150 scams listed on popular website Deadcoins, it’s easy to see how inexperienced ISO investors are being suckered.

The losses have become so prevalent that the US Securities and Exchange Commission (SEC) launched its own ISO scam in a bid to show investors how easy it is to set up such schemes.

The top ten most notorious ICO scams to date

Scam name Amount of money scammed ($)
Pincoin and iFan 660,000,000
Plexcoin 15,000,000
Bitcard 5,000,000
Opair and Ebitz 2,900,000
Benebit 2,700,000
Bitconnect 700,000
Confido 375,000
REcoin and DRC 300,000
Ponzicoin 250,000
Karbon 200,000

 

Despite the SEC warning that ICOs “bring an increased risk of fraud and manipulation” due to the lack of regulation, the number of ICOs, as well as the amount invested, has increased over the past year.

biggest ICO scams

In 2017 $6,240,046,555 was raised across 371 ICOs. However, in 2018 a staggering $20,074,423,238 has been raised across 789 ICOs to date.

This reveals a 222% increase in the amount raised in 2018 so far, compared to the full year of 2017. Additionally, there is a 113% increase in the number of ICOs in 2018 so far compared to 2017.

If Satis Group’s suggestion that almost 80% of 2017’s ICOs were identified scams is correct, 297 ICOs in 2017 may have been fraudulent. If this trend was to continue in 2018, 631 ICOs could be fraudulent.

Despite such shocking statistics, ICOs remain a relatively popular investment in 2018, with $20.1 billion being invested into ICOs so far.

The amount invested in ICOs in 2018 to date

Month Money invested ($)
January 1,985,750,821
February 1,660,013,613
March 4,173,112,271
April 1,268,948,460
May 1,985,596,961
June 5,778,213,703
July 809,577,207
August 989,375,043
September 1,423,835,159

 

So, what are the red flags that may alert you to an ISO scam? The following were present in the most high-profile incidents:

  • Silence from companies when contacted by investors
  • Lack of a whitepaper and inconsistencies on the ISO website
  • Fake Linkedin Profiles of “the team” with stock images or stolen photos
  • Any text humourous or otherwise outlining a scam
  • Promise of fixed profit or guaranteed ROI

This guest contribution was provided by Fortune Jack

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South Africa’s Xago Deploys RippleNet in its Gateway to Boost Financial Inclusion

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Xago

Xago, a money transfer startup that aims to increase financial inclusion in Sub-Saharan Africa, has announced the integration of RippleNet to its gateway.

The Xago Gateway

The South Africa-based fintech company has deployed RippleNet to its gateway to enable local and international fiat currency and digital asset transfer. RippleNet is a blockchain-based global payments network that is made up of payment providers, banks, and financial institutions launched by San Francisco-based Ripple.

According to Xago, the users of its payments platform will be able to access the transfer and exchange of digital assets via the XRP ledger. Additionally, the integration of RippleNet to the Xago gateway will enable customers to exchange the South African Rand for XRP.

“Xago uses the XRP Ledger as a distributed exchange where users can exchange XRP for ZAR,” said Xago.

The Xago gateway provides an entry point to the Ripple Network where customers can enjoy low-cost cross-border payments, instant payments, frictionless transfers, and transparent transactions.

Xago’s gateway is built for businesses while Ripple’s payments network is an enterprise blockchain solution. The Xago gateway acts as a connection between market makers and customers.

How it Works

XagoTo register to use the gateway, both businesses and individuals will need to undergo a KYC process. Xago also uses a third-party service provider to ensure that the platform is compliant with the Financial Intelligence Centre Act regulations.

Xago acts as both an issuing gateway and a private exchange with the gateway offering “a way for money and other forms of value to move in and out of the XRP ledger.”

Xago’s withdrawal fees are fixed at ZAR 8.50 while transaction fees vary with market prices. All fees are quoted for customers once an order is placed.

Boosting Financial Inclusion to the Unbanked

Xago said it picked RippleNet for its gateway because the network offers low-cost, secure, transparent, and instant payments to the unbanked, according to a report by TodaysGazette. The move could boost Xago’s goal of increasing access to financial services through technologies such as mobile phones to the unbanked.

According to data from the World Bank, 66 percent of the Sub-Saharan African population does not have access to financial services. However, mobile money is driving financial inclusion in the region with the number of adults holding mobile money accounts doubling to 21 percent. That could mean that mobile phones could be the key to driving financial inclusion in Sub-Saharan Africa.

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Commit Good Launches Charity Project in Botswana With $GOOD Cryptocurrency

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Commit Good

Commit Good, a blockchain-based charitable organisation, has launched its first proof-of-concept project with the Rentse Foundation Trust. The reward-based, charitable platform will help the foundation to build homes in Otse, Botswana using the startup’s digital currency, $GOOD.

The $GOOD Currency

Commit Good’s Currency of Good campaign allows users to grant funds in $GOOD tokens to any charity anywhere in the world. Charities post current projects on the website where users can then vote on the most impactful projects. These users are rewarded with GOOD tokens.

The recently announced project to build homes in Otse, Botswana will be one of the first of the Currency of Good campaign, which will award a $10,000 grant each month to the charitable organisation that receives the most votes from Commit Good users.

The Rentse Foundation Trust, a non-profit organisation committed to providing homes to the elderly and individuals in underdeveloped areas of Botswana, was given a grant of 58,824 $GOOD – the equivalent of $10,000 – from the Currency of Good campaign funded by the Financial Trading Group (FTG).

“The collaboration with Commit Good and FTG are opening new doors for our project. By using $GOOD as a new source of funding, we are developing low-cost homes to shelter the most poverty-stricken families in Botswana,” said Rentse Ugokwe, founder and CEO of the Rentse Foundation Trust.

The foundation will use a third of its received $GOOD to build one of 50 desired homes in a remote village of Botswana. IMATU Enterprises, a construction company, will accept $GOOD as payment, making it one of the first housing projects in the world to be funding with cryptocurrency.

Commit Good Blockchain Fundraising Platform

Commit GoodCommit Good is a reward-based, fundraising platform dedicated to creating a global charitable economy on the blockchain through the integration of marketplace features and fundraising.

The startup believes using the blockchain could bring transparency to the philanthropy industry. The organisation also helps charities locate other resources like in-kind donations and volunteers. The Commit Good organisation verifies all charities and needs before they are posted on the platform.

Launched in the second quarter of 2018, the “Currency of Good” campaign allows charitable organisations to post projects that are currently underway on the Commit Good Platform. These organisations can then make a request for funding or items that are needed to complete their projects.

There are some large charities on the platform like Habitat for Humanity, Catholic Charities, Ronald McDonald House, and Feed the Children but the organisation wants to focus on smaller charities that have limited access to funding.

Clay Braswell, the CEO of Commit Good, told TechBullion in an interview that he believes the charitable space could be one of the early success stories that will enable mainstream user adoption of the blockchain.

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BitMinutes to Reduce Cost of Money Transfer With Blockchain in Nigeria

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US-based blockchain company, BitMinutes Inc., has launched a blockchain token and an agent network in Nigeria to lower the cost of transferring money and to ease access to micro-loans.

BitMinutes Enters the Nigerian Market

In January, BitMinutes announced a partnership with BODC Trading & Investment Company in a bid to enter the Nigerian market.

BitMinutes would be offering people in the country the ability to purchase goods and services with BMTs, send them to friends and family, and convert unused mobile phone minutes into BMT which could then be turned into Naira for deposit into a bank account. Moreover, in the future, Nigerians will also receive access to micro-loans backed by BitMinutes tokens.

After just two months in the country, the CEO of BitMinutes, Tom Meredith, says adoption has been on the up, according to a report by Business Post.

“We’re ecstatic that Nigeria’s citizens have embraced the BitMinutes Nigeria program. They recognise that the economic incentives, including five percent cash back on purchases of BitMinutes and 12 percent annualised return on those BitMinutes that remain in their account, are very compelling propositions,” Mr Meredith said.

Nigeria will serve as a trial point for BitMinutes before the company expands the business model across other countries on the continent.

The BitMinutes Token

BitMinutes LogoBitMinutes token (BMT) is a prepaid airtime minute on the blockchain. The prepaid minute is a real asset that can be traded and, according to the company, is already traded informally by mobile phone owners around the world.

This token is a cryptocurrency that facilitates free peer-to-peer cash transactions to users’ bank accounts and provides the ability to extend micro-credit and nano-credit to individuals and businesses that have limited access to capital and the traditional financial system.

The blockchain enables the tracking of token ownership and transactional records to build a credit score of users. And the inter-changeability between prepaid minutes and cash makes it possible to collateralise peer-to-peer loans.

BitMinutes’ Business Model

BitMinutesBitMinutes deploys a Trusted Agent Network (TAN) model to provide a physical presence for the network. The BitMinutes Nigeria team will drive the effort to identify and manage TAN Agents, which would be mostly small businesses.

These agents sell BMTs that can be converted to phone minutes on different local carriers and also help users to convert unused cell phone minutes into BMTs, which could be used for payments of goods and services at TAN retailers. TAN agents would also facilitate the process of giving microloans to users. The TAN program already has over 100 agents.

“We have been very pleased with the interest of Nigerians, both in becoming trusted agents and BitMinutes account holders,”

said Ravi Narain, the Director of the BitMinutes Nigeria program.

With only 40 per cent of Nigerian adults having a bank account, blockchain use cases like BitMinutes could play a pivotal role in the financial inclusion programs of the Nigerian government.

Nigerians are already one of the top adopters of bitcoin on the continent, using the cryptocurrency primarily for investment and remittance purposes. According to a recent Luno survey, which sampled over 1,000 Nigerians, 70 percent buy cryptocurrency as a form of investment while only 30 percent use digital currencies for payment and remittance.

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