Business 13 July 2018

Gerald Fenech

Over 80% ICO projects in 2017 are ‘identified scams,’ Statis study finds

The cryptocurrency space has grown astoundingly since its early beginnings in 2013, according to a report by advisory firm Statis Group, which analysed the situation in the field over the last five years. However, the report also sounded the alarm on initial coin offerings (ICOs), saying that a staggering 80% of the total launched projects were identified scams.

In 2017, “over 70% of ICO funding (by $ volume) to-date went to higher quality projects, although over 80% of projects (by # share) were identified as scams,” according to the Statis study. Analysts broke down the numbers further, noting that 4% of the ICO projects failed, 3% had “gone dead,” which meant that the ICO was “not listed on exchanges for trading and has not had a code contribution in Github on a rolling three-month basis from that point in time.”

A total of $11.9 billion were invested in token crowdsales, but the analysts said 11% of this amount ($1.34 billion) went to three “relatively old school frauds”: Vietnam’s Pincoin raked in $660 million in investments; U.S.-based Arisebank raised $600 million; and German ICO Savedroid received approximately $50 million.”

Other “identified scams” got away with $30 million in raised funds. Analysts, however, pointed out that the scams received little funding compared to the whole industry, stating that 54% of ICO fundraising to date went to projects “we would classify as successful… a direct contrast to the outcome when you look at the percentage of successful and scam projects on a per numbers basis.”

To date, there are over 800 crypto tokens that were either extinct or now worth than less than a cent, according to Dead Coins. The website keeps a track of the so-called “dead coins,” or tokens that have been abandoned, with no nodes, no social updates, a dead website, have low volumes, or have seen its developers walked away from the project.

Like the Statis report, a study conducted by two researchers at Boston College revealed that just 44.2% of all ICOs launched remained active after four months of their launch date. According to the study, “83% of the 694 ICOs that don’t report capital and don’t list on an exchange are inactive after 120 days. For the 420 ICOs that raise some capital but don’t list, this figure falls to 52%, and for the 440 ICOs that list on an exchange, only 16% are inactive in the fifth month.”

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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