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Exit scammers run off with $660M in ICO earnings
- matt_wulfeck 8y ago> raising $660 million from approximately 32,000 people. Honestly where is this money coming from? Is there just that much money sloshing around in the world chasing after these harebrained ideas?
- orthecreedence 8y ago> Is there just that much money sloshing around in the world chasing after these harebrained ideas? No, it's probably based off market cap. Let's say I generate 100B tokens. I happen to con you into buying one for $0.01. Boom, the price of my token is $0.01 per coin, and I have 99,999,999,999 of them at a market cap of $1B. Only $0.01 of actual value has been exchanged, but I can now "exit scam" with $1B in supposed value. In reality, they probably had a few million, maybe tens of millions at most. $660M is a ridiculous number, probably only achieved by factoring their stupid coin's market cap in.
- pjc50 8y ago> "Investors have been told that they would enjoy a profit rate of 48 percent a month from their initial investment, and recoup all investments after four months. People would also be rewarded with an eight percent commission for every new member they have introduced to the network." There's your red flags right there.
- justherefortart 8y agoYep, every Ponzi scheme does this it seems.
- jandrese 8y agoThat's practically the definition of a pyramid scheme.
- kolpa 8y agoPonzi not Pyramid. Pyramid means that each participant makes their money directly from their downline, in a self-similar way. And a Pyramid scheme can be totally honest, relying eyes-wide-open on the sigmoid curve for its initial success and eventually failure. A Ponzi scheme lies about the source of financial returns.
- jandrese 8y agoThey're being told to recruit people to "invest" so there is money in the fund that can be taken out before the inevitable crash. The returns they talk about are clearly just numbers they pulled out of their ass. Nobody should give those a second glance. It's all about getting more suckers in there and getting out before they realize they've been suckered.
- egeozcan 8y ago> every Ponzi scheme does this This is what a Ponzi scheme does, in other words, this is the definition of a Ponzi scheme.
- deleted 8y ago[deleted]
- ashleyn 8y agoThis is one thing most people don't understand. If someone is selling you a financial instrument with >6-7% annual returns, it's as ridiculous as someone selling you a time machine or the cure to death. The top 500 companies by market cap don't do much better than 6-7% annually on average.
- piracykills 8y ago> >6-7% annual returns I wouldn't say quite that low, even S&P averages are often higher than that. But 48% monthly is going to be something like a >1000% yearly interest rate. You really don't get much more of a dead giveaway than that, at that point you're either a fool or you're gambling and hoping you get out before a greater fool does.
- ashleyn 8y agoWillfully participating in a Ponzi scheme is a crime.
- piracykills 8y agoAre suspicions really enough to put you into illegal territory here? If so it'd be a very hard crime to prosecute as unless you were working for them or something it's very hard to prove you aren't just another victim.
- alehul 8y agoRather than Ponzi scheme, I'd classify the investors as participating in a Pump & Dump. A Ponzi scheme is when it's an investment vehicle (i.e. hedge fund) that provides returns to older investors through capital acquired from newer investors. In this case, by contrast, it's overhyping (to the point of fraud) a publicly traded security in hopes of rallying some investors to buy in, which increases the price, further validating the potential and convincing more investors to buy in. Merely participating through buying in a Pump & Dump process is completely legal; it only becomes illegal if you're the party using fraudulent information to increase the value of the security.
- TheSpiceIsLife 8y agoI would have stopped at ”ICO”.
- AndrewStephens 8y agoI stopped at the 'C'. Even if you accept that bitcoin has some legitimate worth there is no justification for all the rediculous Coins that pop up constantly. Why do people buy them? Are they trying to collect them all like a young person's version of Franklin Mint?
- cm2187 8y agoSounds as useful as collecting RSA public keys. If you want them all...
- TomK32 8y agoNo thank you Sir, I'll stick to my collection of GPG public keys.
- Kiro 8y agoIt's fun.
- mrb 8y ago«no justification for all the rediculous Coins that pop up constantly» The market certainly agrees with you, this is why the top 5 coins account for the 75% of crypto market cap, valuing the combined value of the hundreds of others at less than 25%.
- blechinger 8y agoI've tossed money at a few smaller projects that solve a legitimate need. Projects like Nano, or Kyber, or Loopring. The difference, I think, is that I rarely get in on ICOs, I don't throw any money at it I can't lose, and I think of it less like an investment opportunity and more like an easy way to help tech startups I believe in without having to get directly involved. That's why I "collect" them. :)
- Balgair 8y agoIt is always amazing to me that humans are just so predictably greedy. You'd have thought that we'd have learned any damned thing from history. For other readers with a bit of free time this Friday afternoon, XtraHistory has a great series on the 'South Sea Company' Bubble and the always interesting First British Prime Minister, Robert Walpole: https://www.youtube.com/watch?v=k1kndKWJKB8 https://www.youtube.com/watch?v=k1kndKWJKB8
- bhouston 8y agoThere is another one going around in Vietnam called Polynetwork which is a clear scam: https://polynetwork.org/ https://polynetwork.org/
- myth_drannon 8y agoLooks like it was always going down from the initial offering and the price now is basically 0 https://coinmarketcap.com/currencies/poly-ai/ https://coinmarketcap.com/currencies/poly-ai/
- ryanbertrand 8y agoI don’t understand how we have all this information on the internet and people still get sucked into these scams. 48%...that is not a realistic guaranteed return! :/
- pjc50 8y agoBecause the pro-scam information surfaces easier than the anti-scam information? Watch one ponzi scam video on Youtube and the algorithms will start showing you others ...
- creeble 8y agoThis is an interesting phenomenon in general.
- ceejayoz 8y agoIt's something the major social network sites are going to have to wrangle with. Someone who expresses even a tiny interest in conspiracy theories or extremist views gets pushed progressively deeper into that rabbit hole over time.
- vkou 8y agoThe problem with conspiracy theories is that we have no shortage of well-documented, actual, real conspiracies - alongside bullshit about how George Bush was a reptilian from the planet Xoros. The former absolutely need to be talked about...
- notahacker 8y agoDepends a bit on your susceptibility to believe such things in the first place. If you're a little sceptical of some foreign policy incident and YouTube keeps surfacing the works of Alex Jones and David Icke as possible answers to the questions you've just seen a compelling video ask, there's a good chance it'll make you less questioning of the mainstream in future.
- 8y ago
- OscarTheGrinch 8y agoInitial. Clown. Outwitting.
- mkirklions 8y agoI tried warning people that 99% of alt coins die. They rather believe in unicorns.
- solarkraft 8y agoI did think that some alt coins would survive, but then again I'd rather trade in fewer.
- spookthesunset 8y ago> I tried warning people that 99% of alt coins die. I love this logic. Everything but Bitcoin is somehow a shitcoin. Maybe, just maybe, Bitcoin belongs in the same stack as all the rest...
- maxander 8y agoGiven how often things like this have been happening, it’s no longer “initial,” it’s iterative.
- kolpa 8y agoIterative Con Opportunity
- throwawayReply 8y agoDid it actually raise 660m or was that the size of the "market cap" when it collapsed? if I sell 100 tokens for a dollar then convince someone to buy 1 token for 10 dollars, if I run off with the money I've not run off with $1000 even if it feels like it for the people left with tokens.
- vehementi 8y agoIn these situations they sell their bullshit tokens for real money (or BTC/ETH), so they would have run away with the actual money or something within an order of magnitude, not some fantasy "market cap".
- CurtMonash 8y agoIt sounds like they pulled the plug after as little as 2-3 months of supposed ~50% monthly increases. So the chance that the real money stolen is somewhere in the vicinity of 1/4 the apparent loss seems high. Your figure of 1/10 to be conservative sounds sadly sensible.
- halflings 8y agoThis is an ICO. The scammers got paid in cold hard cash.
- monochromatic 8y agoWell yes, but the question is how much?
- spookthesunset 8y ago> Well yes, but the question is how much? The irony being that the blockchain was intended to answer a question like this....
- Rotdhizon 8y agoAt this point you really can feel no sympathy towards anyone who gets suckered into these types of scams. Same thing with facebook scams or instagram/snapchat pyramid schemes. If you really are that nice word for lacking intelligence or any ability to think for yourself, then you deserve what you get in terms of financial loss or social backlash. There isn't even a target demographic for this, people from all over the board are falling victim. From old people with their retirement savings to young adults who spend their minimum wage paychecks on it, all in the hopes of getting a quick turnaround. That's not meant to come off as mean or condescending, you can only say to someone "It's okay, everyone makes mistakes" so many times before you stop feeling pity towards their poor decision making. A thing to note in my eyes is that different to social media scams, these ICO scams aren't even being that pushy in terms of advertising. When engaged with a pyramid scheme, people tend to be pretty aggressive in getting you to join. With these scam coins, people are willingly going up to them with little to no previous information and dumping their bucket of pennies in the well. EDIT: Getting down voted for being blunt. Sucks to lose rep because people don't like to hear the truth.
- mkirklions 8y agoYep, as someone that has been around for years, I have no sympathy for alt-coiners. We told them to trust BTC only. We told them HODL applies to BTC only. We told them 99% of alt coins die. They decided not to listen.
- 908087 8y agoIs this post meant to be a joke? How are those people you guys were telling to buy in and "HODL" at ~$20k doing now?
- orthecreedence 8y ago"Buy the dip!!!1"
- aje403 8y agoIs this meant to be a joke? Just wait until “institutional” money starts flooding in and the government converts to bitcoin and all oppressed nations are freed and then we will see who is laughing.
- deleted 8y ago[deleted]
- jimrandomh 8y agoDollar figures in cases like this shouldn't be trusted. ICO scammers have an incentive to make it look like they're getting more investment than they really are, since that gets them more attention. They can easily achieve this through self-dealing--taking their own money and giving it to themselves under another identity. They can even reuse the same money to do this multiple times; that would leave evidence on the blockchain, but I'm not aware of anyone who checks for such things.
- jcoffland 8y agoAnd article authors have an incentive to make the numbers as big as possible to attract the most attention. They happily use the highest wild estimate in the title.
- matthewdgreen 8y agoSomebody should look for this. However, it's very easy to launder this money through an exchange to hide the obvious tracks.
- 908087 8y agoI've always assumed that the majority of these shitcoins that come out of nowhere with a copied and pasted whitepaper, then suddenly receive $10M+ in "investment", are just schemes designed to launder cryptocurrency drug/gun/etc profits.
- deleted 8y ago[deleted]
- SunnyR 8y agoPonzi schemes evolving
- jjallen 8y agoThis is super sad & bad for the space and for those of us that work in the industry and just want to build real stuff. $600m is a ton for anywhere, but especially for Vietnam! I hope there is an international manhunt ongoing.
- banachtarski 8y agoMan if only we had regulation! Oh wait
- DCoder 8y agohttps://twitter.com/stephendpalley/status/982353358915801088 https://twitter.com/stephendpalley/status/982353358915801088
- simias 8y agoI'm sure once that "real stuff" releases it'll replace the speculation and scamming in the news and the forums. When's that happening by the way? Surely all these billions of dollars that have been poured in cryptocurrencies and "blockchain technology" in the the past years will soon come to fruition, right? I can only hold my breath for so long...
- spookthesunset 8y ago> This is super sad & bad for the space and for those of us that work in the industry and just want to build real stuff. This is the "real stuff".... it just isn't the techno-futuristic utopia that some hoped it would become. Turns out, blockchain and all the goo floating around on top make an excellent platform for financial fraud and that is about it. Bitcoin, ICO's, The Blockchain, and everything else running in this space makes it all a world-class platform for running classic scams with a modern twist.
- jjallen 8y agoI'm especially dismayed that they brought the Ethereum name into it. Ethereum already gets a bad rap because it's easy to write insecure smart contracts, if someone uses the platform to pull off a scam that's even worse. I doubt they even created a dapp or wrote any code though.
- orthecreedence 8y agoMaybe Ethereum is stupid for encouraging "tokens" in the first place, and maybe their name should be dragged through the mud.
- onetimemanytime 8y ago>> "Investors have been told that they would enjoy a profit rate of 48 percent a month from their initial investment, and recoup all investments after four months. People would also be rewarded with an eight percent commission for every new member they have introduced to the network." Scammers don't deserve the money but fools and their money...
- kolpa 8y ago"You can't con an honest person" (Not actually always true, but applies to many scenarios)
- knodi 8y agoGreed is a motherfucker.
- Dowwie 8y agoThe story is unbelievable on many levels.
- joshfraser 8y agoWhere's the smart contract that collected those funds? I'm really skeptical about that $660M number. Filecoin raised $257M and they had the support of a bunch of VCs, top crypto funds, smart crypto whales, and thousands of supporters around the world. $660M for a coin no one has heard of? Doesn't add up.
- trappist 8y agoHaven't found the ICO contract, but the ERC20 contract says there are 1,912 token holders while OP says there were 32,000 investors. https://etherscan.io/token/0xC8a8D2A81cc86b95beb04E5a320D7E53F3c627dd https://etherscan.io/token/0xC8a8D2A81cc86b95beb04E5a320D7E5...
- joshfraser 8y agoSeems like Techcrunch may have regurgitated some alarmist articles without any fact-checking. I'm not finding the evidence either.
- NelsonMinar 8y agoI'm also skeptical about the $660M number. To put that in perspective, Vietnam's GDP is $232B, so this is about 0.3% of Vietnamese GDP. 0.3% of the US GDP would be about $50 billion. FWIW most articles I'm finding source the $660M number to the linked Tuoi Tre News story. Their quote is "The victims said the company had conned them out of VND15 trillion (US$660.79 million)." https://tuoitrenews.vn/news/business/20180409/vietnamese-cryptocurrency-scam-allegedly-deceives-thousands-to-swindle-660mn/45001.html https://tuoitrenews.vn/news/business/20180409/vietnamese-cry... I have no doubt there was yet another ICO scam with someone walking away with the money, but I wonder how much money it was.
- dopamean 8y ago$660 million across 32,000 people is over 20 grand per person. That seemed a little crazy to me.
- bandrami 8y agoThe "investors" (ahem) are no doubt counting their expected returns as the amount they are out, rather than their capital outlay.
- squaresmile 8y agoI just searched around and there is a fair chance the number might be legit. In the first paragraph of this article [1], it says that the amount in VND is converted from 650MM in USD, taken from the ICO organized by the Modern Tech company. I think a comparison to the wealth is fairer than to the GDP. There are quite a lot of under-reported revenue streams in Vietnam. It's definitely still a sizable chunk though and any dollar amount assigned to cryptocurrencies should be taken with a big grain of salt but I can definitely see it happening. [1] https://kinhdoanh.vnexpress.net/tin-tuc/doanh-nghiep/nha-dau-tu-vao-tien-ao-ifan-keu-bi-lua-15-000-ty-dong-3734520.html https://kinhdoanh.vnexpress.net/tin-tuc/doanh-nghiep/nha-dau...
- gwbas1c 8y agoMaybe they are so good that they were able to get most people of means in Vietnam to invest?
- 8y ago
- m3kw9 8y agoClassic pyramid scheme, I think 660mil in Viet currency?
- learc83 8y agoNo, that's less than $30k. The article says USD.
- quadcore 8y agoAgain we find that the current, unregulated, ICO market is the most interesting system for parting fools from their money in recent history. Jokes apart, I think it's a good thing. It's 2018, if people are exposed to that kind of scam today, they will evolve quickly, especially the kids. They will develop critical thinking and bullshit detectors. They will stop believing in advertisement and, more importantly, propaganda.
- ben509 8y agoYup, this is a natural market correction of stupidity. We need more idiots to get bit, not to protect them from themselves. "Capitalism without bankruptcy is like religion without hell."
- s73v3r_ 8y agoAnd hopefully remember why we have things like the SEC and securities regulation.
- deleted 8y ago[deleted]
- johnchristopher 8y agoCan anyone help ? I have been trying to find a site that was submitted to HN a week or two ago. It was a fake site about a blockchain scheme but the author's intention was to highlight the shortcomings. It was before 1st april. Thanks :).
- jtwebman 8y agoHow is this different then Bitconnect or any of the other 100's of ICO scams that have happened in the last year?
- aviv 8y agoI'm old enough to remember StockGeneration.com [1]. Different decade, different suckers. [1] https://en.m.wikipedia.org/wiki/Stock_Generation https://en.m.wikipedia.org/wiki/Stock_Generation
- johnrichardson 8y agoThere's no way they raised $660M. Even $66M would be pushing it. I hope TechCrunch edits this article with a more accurate number. Filecoin and Tezos both raised about $200M and were considered massive ICOs, not to mention they happened in the wealthiest countries on earth and were heavily backed by institutional investors. It's simply impossible that an obviously scammy ICO in a relatively poor country raised $660M.
- aphextron 8y agoI like that we’ve just come to accept daily occurences of billion dollar ponzi schemes as a cost of doing business. This is great. You crypto people should be proud of yourselves.
- rs86 8y agoIt's not that ICOs are bad, it's that there are people naive enough to believe this kind of shit.
- lu11 8y agoPeople buying cryptocurrencies are NOT investors. Period.