5 Notable ICO Exit Scams of 2018
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During the peak, ICO season, projects large and small appeared and some disappeared overnight, or failed to develop. But five projects attracted significant attention with their dramatic exit scams in 2018.
The year 2018 had a large number of ICOs, most of whom raised a lot of money during the first six months before the trend slowed down. However, despite the trend reversal, most projects managed to raise significant amounts of Ethereum (ETH) only with a whitepaper and vague promises.
Roughly $7.8 billion was raised during the period, and some founders decided to take off with the money instead of delivering on their promises. ICO exit scams in 2018 ranged from the catastrophic to the merely comedic. Here are the five notable ICO exit scams of 2018:
Centra ICO Scam
Centra (CTR)was an exit scam from the spring of 2018 when the ICO craze was still going strong. CTR was an older ICO, and was even trading on large-scale exchanges, includingBinanceand Huobi. The Centra ICO raised $32 million, and even hired celebrities to endorse its alleged new economic system. Centra enjoyed the endorsements of DJ Khaled and Floyd Mayweather, who were later called to testify on their involvement with the project.
The Centra scam ended dramatically, with the arrests of the three co-founders. One of them was attempting to flee the US on a flight when he was caught. The asset was immediately delisted from all exchanges.
BlockBroker ICO Scam
BlockBroker‘aimed’ to eradicate ICO fraud, but ironically, committed just this crime. Users issued warnings that the team was not intending to deliver anything, and in fact, the team was using fake photos. The BlockBroker ICO only managed to raise around $300,000 in May 2018, one of the stronger months in general for ICOs, and disappeared a month later, in June 2018.
Prodeum ICO Scam
Prodeumwas a scam ICO that only raised a small amount of Ethereum (ETH). The project had a curious taste for influencer publicity, making social media users write “Prodeum” on their bodies, or post a picture holding a banana. Then the project wiped out its site and all related social media, including its white paper. Notoriously, the project site was deleted and replaced with the word “penis”. Prodeum did not manage to swindle many users but was a warning that any silly idea and a white paper could generate noise and get attention during the wildest days of the ICO craze.
LoopX ICO Scam
LoopXraised its funds at the beginning of 2018, when the going was still strong. The project offered a series of token sales, raising a reported 276 BTC and 2,446 ETH. The exit was a classic - the team went missing from all social media. LoopX happened at a time of high-level ICO euphoria, where lesser exit scams were happening almost every week. LoopX enticed investors with the idea of high-profitability algorithmic trading, promising the potential for passive income.
PureBit ICO Scam
PureBit:Toward the end of 2018, pessimism and the bear market weighed down on all participants. PureBit, an ICO-funded startup, was promising to launch an innovative cryptocurrency exchange. ICOs that copied the efforts of Binance were cropping up right and left - and PureBit, despite raising 13,000 ETH, failed to perform and simply folded. Later, the project started torefund the ETHraised, erasing the exit scam accusations, but still getting listed as a failed project.
The PureBit exchange only worked for a short time, during a period where trading was notoriously slow and users were losing interest due to dropping prices. PureBit, despite originating in South Korea, raised its funds abroad, to circumvent the ban on domestic fundraising. The promise of an exchange-based token, with the potential for passive earnings based on trading fees, enticed buyers to pour funds into PureBit.
The year 2018 saw multiple scams, but ICO scams are notable for the ease with which they were conducted. For now, the ICO mania has died down, but exit scams are happening still, as in the recent case ofNovaChain, which managed to gather user funds in exchange for the promise of high earnings based on bot trading.