ICOs, which have really only been around in full flight for a few years, have had an interesting growth pattern. The hype that was 2017 when it came to ICOs saw a lot of bright ideas, with very little execution.
There have been many scams along the way, in fact, nearly half of all ICOs from 2017 are scams.
SwissCoin was brought to the ground when the Ukrainian Prosecutor's office, along with the national police exposed the fraudulent Swiscoin project, whose creators are suspected of embezzling investments worth more than $500,000.
The offices of the company and the places of residence of citizens who took part in the project are searched. Money, weapons, and ammunition were found.
SwissCoin promised to develop a system of instant, virtually interest-free payments anywhere in the world, but no white paper was published, and there was also no information about the developers.
PayCoin began in 2014 by the notorious Josh Garza and GAW miners but showed a lot of promise with an interesting white paper that talked about building a new breed of cryptocurrency.
However, when it came to launching the ICO, the developers rushed it out as another generic altcoin clone in the hopes of hitting the market and pumping the coin.
After a huge launch, and a big boom in market capitalization, things started to deflate as the team failed to keep their promises. One of the major ones was the $20 pay floor, which also failed and saw a mass exodus of interest
Ahoolee raised $ 3 million to build the world’s first search engine for products! Ahoolee wanted to build a system that compares prices in online stores worldwide using a decentralized platform for collecting and indexing information from open sources with confirmation of authenticity based on the Blockchain technology but it ended as one of the biggest scam icos in history.
The PlexCoin ICO was halted in December 2017 by the US Securities and Exchange Commission (SEC) in response to an official complaint that founder Dominic Lacroix was defrauding American and Canadian investors. The complaint alleged that Lacroix was advertising an astronomically high return of 1,354% (that the SEC determined was unable to be delivered), pushing forward a group of fake experts to bring legitimacy to his project, and trying to obscure his past financial crimes, which included defrauding investors in a micro-loan venture.
The SEC has frozen all of the $15 million gathered by the ICO from its launch in August 2017. Lacroix was jailed, and the PlexCoin parent company fined $100,000. About $810,000 was still being held by payment processing company Stripe while the rest of the funds were located in various cryptocurrency wallets belonging to the Lacroix. It’s unclear exactly what charges will be brought against Lacroix and what will happen to the money deposited in his wallets. However, PlexCoin was one of the largest attempted ICO exit scams in history, which thankfully was nipped in the bud.
Benebit claimed to use a Blockchain token system to unify customer loyalty programs, like frequent flyer miles. This ICO had all the trappings of legitimacy, including a moderated Telegram channel with over 9,000 members, a marketing budget of over $500,000, and promotions for the token pre-sale. With a novel concept, a serious-sounding white paper, and some well-spent marketing dollars, the Benebit team were able to generate a good deal of hype, and investors began to buy in.
However, things started to go south when someone noticed that photos of the team appeared to have been stolen from a UK school for boys. Passport details provided by the ‘founders,’ were all fake. After this revelation, the team behind the scam began pulling down anything related to Benebit, including the website, white paper, and social media accounts. Estimates vary, but the scammers are believed to have walked away with at least $2.7 million and as much as $4 million.
6 REcoin and DRC
On the face of it, REcoin (Real Estate coin) and DRC (Diamond Reserve Club) tried to do something ambitious and daring - create a cryptocurrency that was backed up with real-world assets - real estate and diamonds. Their founder Maksim Zaslavskiy claimed that both startups were fully staffed, lawyered up, and had already formed relationships with retailers and investors - none of which was true.
The SEC alleges that neither REcoin nor DRC had any “real operations”, that both startups had misrepresented their total level of investment, and that neither of the proposed projects had any tokens or anything to do with Blockchain whatsoever. SEC decided that REcoin and DRC weren’t ICOs at all and were actually securities, which led to Zaslavskiy’s arrest on September 29 2017. According to the SEC, Zaslavskiy did manage to rake in about $300,000 before being caught, despite he initially saying that funds raised from both ICOs amounted to over $2 million.