A former member of the Monetary Policy Committee at the People’s Bank of China believes the ban on China should be reconsidered.
With new projects trying to get off the ground in a creative way by raising funds, the concept of an initial coin offering (ICO) can be both an incredible way for a company to succeed or an abysmal failure seeing the loss of funds, trust and reputation.
Here, we take a look at five of the most controversial falls from grace in ICO history.
Sometimes ICOs make controversial news because they fail owing to mistakes and problems. Other times the controversy is in their ‘success’.
Enter SwissCoin, which promised a brand new system which would offer instant, interest-free payments across the globe. Although this might sound great, the fact that the project offered no white paper and no legitimate information from the developers wasn’t exactly optimal.
The Ukranian Prosecutors thought the same thing and brought the project to a close, calling it the fraudulent scheme that it seemed to be, but not before the founders managed to swindle more than $500,000 USD from willing – and unlucky – investors.
Hoping to achieve safety on the blockchain as a new project, Enigma ironically failed because of a breach of security in one of the most major hacks seen in cryptocurrency.
The intention behind the token was to create a security and cryptographic coin which boasted a new means of encryption to achieve it. Enigma had planned to launch its ICO in September of 2017 to raise funds for the project but scammers were able instead to raise funds – for themselves.
Scammers managed to hack into the account of Enigma’s CEO, Guy Zizkind, because of simple mistakes such as not setting up a two-factor authentication precaution. The hackers got into Enigma’s mailing list, website, and Slack accounts ahead of the ICO. They used the Slack channel to gain funds from investors in an “early ICO”. While some investors saw the blaring red light of a scam, others weren’t so lucky and sunk their funds into the scam. The staggering mistake led to the hackers making off with an equally staggering near $500,000 USD in Ethereum.
Since then, Engima lost its cryptic nature and investors have been uninterested in the untrustworthy project.
The ICO of CoinDash met a swift end when the company revealed that the token sale had been compromised fairly soon after it began.
The project, which was hoping to become a successful “crypto-based social trading platform designed to help you create and maintain a winning portfolio of cryptocurrencies /em>”, was able to raise $7.53 million USD – a massive amount for a young startup – but then disaster struck.
The Ethereum address into which the investors were plugging their funds was altered when an unidentified hacker got into the system and changed the address.
CoinDash shut their website down and announced the embarrassing incident, saying:
“Contributors that sent ETH to the fraudulent Ethereum address, which was maliciously placed on our website, and sent ETH to the CoinDash.io official address will receive their CDT tokens accordingly.”
Investors were furious and accused the company of operating an inside job, and the sale ended in an angry union of lost funds and a failed project.
The story of another project with a fresh idea and top start ruined by hackers. The DAO was started in hopes to create a system which acted similarly to that of a venture capital fund, but in the cryptocurrency and decentralized space.
With a strong Slack community of over 5000 members, things for this project were looking good and looked as though it would only grow from there with the project managing to gain an overall sum of what was approximately $150 million USD worth of Ethereum.
The good times came to an abrupt end when an anti-pattern in the system was found, which led to hackers succeeding in stealing the funds leaving the project wounded and trust lost.
Known as one of the most controversial altcoins, Tezos started the way it ultimately ended – with a bang.
The ICO turned heads as it managed to gain a whopping $232 million USD in ICO and promised to bring an innovative order to the mayhem that other cryptocurrency networks brought, such as issues around Bitcoin and Ethereum. The creators hoped to achieve a stability on blockchain by producing a way in which users could vote on upgrades to a blockchain network. If it was successful, it would bring a new light to a dark part of cryptocurrency developments.
And the multi-million project might have had a standing change except that it all came crashing down when unresolvable conflict within the team got in the way.
Complications arose when founders Arthur and Kathleen Breitman and Johann Gevers (who became the head of board in place of the Breitmans for reasons pertinent to national jurisdiction) no longer seemed to see eye-to-eye on who should control the project’s development. A 46-page document filed by the Breitmans to remove Gevers apparently wasn’t quite the right way to reconcile the differences and things started to fall apart.
Between in-house fighting and multiple lawsuits, investors lost trust in the project despite the success that Tezos initially saw in the fund-raise. Tezos ultimately lives on under new leadership, but ultimately polarized investors and stands as one of the most painful reminders of an ICO-gone-wrong.