Reactions to the Alarming Frequency of ICO Scams

The initial coin offering paradigm shift may have contributed to 2017's massive bull run, catapulting cryptocurrency and blockchain technology into the mainstream zeitgeist, but the explosion in ICO popularity over the last year led to the establishment of a "Wild west" ecosystem in which fraudulent offerings run rampant.

The high number of fraudulent initial coin offerings active in the cryptocurrency market is no secret, but both recently published reports provide insight into the frequency of ICO scams.

While regulatory bodies worldwide scramble to develop a framework to govern token offerings and cryptocurrencies in general, both reports published by the Chinese government and WSJ reinforce the importance of performing due diligence before investing in an ICO to avoid being taken in by an ICO scam.

The repurposing of stock photos or the use of images appropriated from social media is rife within the fraud ICO ecosystem, but fortunately can be easily discovered by performing a Google image search of the image in question.

The SEC has recently taken action against several ICOs that guaranteed returns to investors, such as the PlexCorps ICO that promised investors a massive 1,354% ROI in less than 30 days and Centra, in which the founders were recently arrested for fraud.

The Wall Street Journal isn't the only organization conducting research into the ICO ecosystem.

While China has taken action in the form of an outright ban on initial coin offerings, the US SEC took a more nuanced perspective on the ICO market, choosing instead to actively educate investors on how to identify a fraudulent initial coin offering.

The SEC recently set up a fake ICO entitled "Howey Coin," promising investors an "Exclusive opportunity" to invest in a travel network that would "Partner with all segments of the travel industry" and allow investors to earn coins that can be traded for profit.

The SEC ICO included amusingly fabricated claims that "HoweyCoins" are "Officially registered with the U.S. government," and "Will trade on an SEC-compliant exchange."

The HoweyCoin white paper is surprisingly well-composed to the point that it's difficult to distinguish it from other low-effort ICO white papers, delivering a relatively strong market assessment.