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Am I totally misunderstanding or do the scams mean that the founders walked away with >$50m in their pockets?

Lazare 8y ago
If you create 50,000 coins (or shares, or whatever), and sell one for $200, then you have a "$1 million market cap!", but you actually got $200. For a scammer behind a coin with a $50m market cap to have walked way with $50m, they would have needed to have sold all the coins at that valuation. In some cases, this may have happened. In many others, they will have sold some coins at that valuation, and others at lower valuations as the coin collapsed. In a few cases, all the transactions may have been "wash" transactions (aka, selling a coin to yourself under a fake name), and the scammer may have received nothing. It's hard to know how much a scammer profited without digging into it, especially in the crypto space where wash transactions are so easy to get away with.
- tCfD 8y ago
  I would say it's impossible to know unless you actually run and operate the exchange(s) through which they ran all of their 'sales'. The exchanges are often complicit in listing these coins and make money from a fee which they demand in order to list and promote them. the exchanges hold all of the real power in cryptocurrency, and there are only a handful of them.
- deltateam 8y ago
  HA! No, all crypto valuations only include the free float in the market! Check out coinmarketcap.com , the leading "valuation" site, and notice that it only counts circulating supply, no matter how small a percent it is to the total supply. All metrics related to "crypto total market cap" are based on dubious circulating supply metrics, when the reality of this is many times higher, even though it is an accounting nightmare regardless. Next up, most coins actually did sell all of their free float / circulating supply in exchange for a more liquid currency. So yes, the $50million projects actually received $50m in usd/btc/eth AS WELL AS granted themselves a sliver of the new currency, akin to private equity and every share company ever. It is double plus good, and scammers are currently walking away with that. But if they are smart, they make their new coin valuable because an even greater windfall awaits and then that means it isn't a scam project at the current threshold of legitimacy.
  - Lazare 8y ago
    I don't think you really understand what "circulating supply" means. It doesn't measure how much is actually changing hands, it just measures how much theoretically could. And even at that, it's very vulnerable to manipulation. > But if they are smart, they make their new coin valuable Citation needed. :)
    - deltateam 8y ago
      I understand what it means, it doesn't matter, that is what is counted.
pbreit 8y ago
Also, real people or organizations have "lost" this money, right?

If you create 50,000 coins (or shares, or whatever), and sell one for $200, then you have a "$1 million market cap!", but you actually got $200. For a scammer behind a coin with a $50m market cap to have walked way with $50m, they would have needed to have sold all the coins at that valuation. In some cases, this may have happened. In many others, they will have sold some coins at that valuation, and others at lower valuations as the coin collapsed. In a few cases, all the transactions may have been "wash" transactions (aka, selling a coin to yourself under a fake name), and the scammer may have received nothing. It's hard to know how much a scammer profited without digging into it, especially in the crypto space where wash transactions are so easy to get away with.

tCfD 8y ago
I would say it's impossible to know unless you actually run and operate the exchange(s) through which they ran all of their 'sales'. The exchanges are often complicit in listing these coins and make money from a fee which they demand in order to list and promote them. the exchanges hold all of the real power in cryptocurrency, and there are only a handful of them.
deltateam 8y ago
HA! No, all crypto valuations only include the free float in the market! Check out coinmarketcap.com , the leading "valuation" site, and notice that it only counts circulating supply, no matter how small a percent it is to the total supply. All metrics related to "crypto total market cap" are based on dubious circulating supply metrics, when the reality of this is many times higher, even though it is an accounting nightmare regardless. Next up, most coins actually did sell all of their free float / circulating supply in exchange for a more liquid currency. So yes, the $50million projects actually received $50m in usd/btc/eth AS WELL AS granted themselves a sliver of the new currency, akin to private equity and every share company ever. It is double plus good, and scammers are currently walking away with that. But if they are smart, they make their new coin valuable because an even greater windfall awaits and then that means it isn't a scam project at the current threshold of legitimacy.
- Lazare 8y ago
  I don't think you really understand what "circulating supply" means. It doesn't measure how much is actually changing hands, it just measures how much theoretically could. And even at that, it's very vulnerable to manipulation. > But if they are smart, they make their new coin valuable Citation needed. :)
  - deltateam 8y ago
    I understand what it means, it doesn't matter, that is what is counted.

pbreit 8y ago

Also, real people or organizations have "lost" this money, right?