Investors have put $ 1 billion worth of funds into a digital coin project that has given warning signs of fraud, The Wall Street Journal reported Thursday (17/5).
In a review of 1,450 digital coin offerings, the WSJ found that 271 wore "red flags" such as plagiarized documents or false executive information. Investors have claimed losses of up to $ 273 million in these projects, the newspaper said, according to lawsuits and regulatory measures.
Coin sales, or "early coin offerings," give investors the opportunity to purchase a new digital token while letting developers get easy access to funding. The process may be too easy for many unproven projects or direct deception. Coin offers have raised about $ 9.8 billion in the two years to mid-March, according to financial research firm Autonomous Next.
The WSJ found widespread plagiarism in 111 online whitepaper projects, including word for word copies of marketing plans and technical features. Demand is so high that freelancers will write papers for $ 100 or more, the report said.
Lifting images and names to create performances of reputable development teams is also unusual.
A Polish banker named Jenish Mirani found that his profile photo was used by Denaro's online payment project to portray one of the founders of "Jeremy Boker," the WSJ said. The newspaper said no one responded to efforts to reach the comp
Many initial coin offerings officially prohibit US citizens and citizens from participating, for fear of the regulatory crackdown.
The US Securities and Exchange Commission (SEC) has frozen assets and charged the founders with fraud in some cases of cryptocurrency fraud.
On Wednesday (16/5), the SEC also launched a website called "HoweyCoins.com" to show investors what online counterfeit coins offer.