According to latest research from the Wall Street Journal published on December 27, around 16% of cryptocurrency projects raising funds through initial coin offerings (ICOs) have been accused of fraudulent activity, improbable returns, and plagiarism.
The investigation was administered by the Wall Street Journal (WSJ) on three of the top ICO websites; ICOBench.com, TokenData.io, and ICOrating.com. WSJ studied white papers of 3291 projects, out of which 513 were considered “questionable.” 30 of the projects were already under the inspection by regulators
The document says:
“To identify duplicate language, the Journal compared sentences with at least 10 unique words to every other sentence in other white papers. Reporters then read and reviewed nearly 10,000 sentences appearing more than once among the 3,291 papers analyzed and removed technical and legal sounding language. Then, the Journal compared reported offering dates to determine which document first published any given sentence and excluded those projects from this database.”
These white papers also documented that the projects that were “questionable” had no websites, which also were hard to contact. Also, when we confronted all of the 513 projects, none of them offered a response.
To allure, the customers, the white papers of 2000 from 3291 projects had sentences like “nothing to lose, guaranteed profit, return on investment, highest return, high return, funds profit, no risk, and little risk.”
The results from Wall Street Journal don’t come as a shocker, as the recent reports on ICO scams have prompted intense examination and growing measures against offerings. Some companies failed significantly, while others took advantage of the funding model to launch merely conceivable projects.
In May, regulators from the US and Canada launched an initiative called “Operation Crypto Sweep,” after concluding that fraudulent activities were all over the place.
While the SEC in recent time, has penalized the celebrities promoting ICOs with fines and other such actions.
As the regulators are now closely monitoring ICOs, crypto startups and entrepreneurs are currently seeking fundings from security token offerings (STO). STO’s are an approach to resolve the compliance and license requirements regarding the security laws.
Countries around the globe are now starting to figure out the regulations of the crypto market, thereby not curbing down the innovation and protecting the customer at the same time. Lawmakers from both United States and the United Kingdom are continually fighting for strict regulations rather than the clampdowns.