About $400 million lost or stolen in cryptocoin offerings since 2015 – report

Victor Barreiro Jr.
About $400 million lost or stolen in cryptocoin offerings since 2015 – report
The report from Ernst & Young, which studied 372 initial coin offerings, says phishing attacks were commonly used to pilfer the money. The stolen amount represents 10% of all the ICO funds raised since 2015

MANILA, Philippines – The cryptocurrency world is flush with new ICOs – initial coin offerings – trying to make it big. These ICOs attempt to raise money to fund the development of a new technology platform or business that uses cryptocurrencies or the blockchain software technology.

Unfortunately, about $400 million in ICOs from a $3.7 billion total – or about 10% of the funds raised across the various offerings – has either gone missing or been stolen.

The report from Ernst & Young, which studied 372 initial coin offerings, says phishing attacks were commonly used. Hackers took away about $1.5 million monthly from ICOs in general using phishing. 

This comes as fewer ICOs actually meet their fundraising goals – 25% in November 2017 compared to 90% in June – with the thefts adding to the risk investors face. 

Reuters adds that according to Paul Brody, global innovation leader for blockchain technology at Ernst & Young, one other factor that makes the issue worse is the volume of less-than-stellar ICOs coming out. Brody said, “The volume just exploded, people raised their fundraising goals and the quality just dropped.”

He added, “We were shocked by the quality of some of the white papers, we see clear coding errors and we see conflicts of interest between the companies issuing tokens and the community of token holders.”

In some ICOs, the code of the ICO held either undisclosed hidden investment terms or contradictory information.

For example, an ICO’s white paper might say it will no longer offer additional cryptocurrency past a certain date, but the coding leaves it open to be changed. 

Ernst & Young’s report adds in many of these ICO projects, blockchain and cryptocurrencies aren’t even really needed or justified. The valuation of the ICO tokens appeared to have been determined by people worried about missing out on the trend of cryptocurrencies striking it rich, which makes the value fluctuate worse in post-ICO trading.  – Rappler.com

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Victor Barreiro Jr.

Victor Barreiro Jr is part of Rappler's Central Desk. An avid patron of role-playing games and science fiction and fantasy shows, he also yearns to do good in the world, and hopes his work with Rappler helps to increase the good that's out there.