Many wanted to get involved in ICO investment seeing how such projects could reap huge returns. Some of the most successful ones such as EOS have become some of the biggest cryptocurrencies. Nevertheless, there are many others that failed to go anywhere, and some that were outright scams. Scams in the ICO industry had got so bad that even the SEC warned investors against such ideas. Out of the many ICO scams, some have stood out above the rest, which is the topic of this post.
This ICO scam initially launched as a platform for offering educational packages, at least that is what was said on the company’s website. However, during the OneCoin recruitment meetings, only crypto investment was discussed, indicating that this was their main idea. These ‘educational packages’ would cost between €100 to €118,000 depending on the level. In exchange, the investors would receive tokens that were supposed to be used for mining OneCoins. The lower costing packages were considered to be starter packages, and the investors could not exchange their tokens for fiat money.
In January 2017, according to the trusted ICO rating website TokenGuru.net, the service was shut down and the investors lost their money. Further investigations went on to reveal that OneCoin was a straightforward Ponzi scheme. Fortunately, the authorities had been on to the ICO scam long before the service was shut down, which saved a lot of investors from falling into the trap. Despite this, OneCoin still seemed to have attracted a lot of investors, which led to investigations and charges throughout 2017. The total amount stolen from investors isn’t known, but Italian authorities charged the company €2.5 million in fines.
Bitcoin Savings & Trust (BCS&T)
Long before Bitcoin was on the mainstream news media, Bitcoin Savings and Trust had already began soliciting investors. It began in 2011 where the founder, Trendon Shavers, promised investors huge returns for their investment. Some of the promises were extremely lucrative, promising up to 7% returns per week! As with all such Ponzi schemes, though, it eventually failed in 2012 when it could not pay what it had promised. In the end, Shavers had acquired 146,000 Bitcoin from his investors, which were worth $807,380 at the time of his hearing in 2014. Of course, Bitcoin value rose significantly in the years to follow, meaning that they were worth much more than that figure. All the same, Shavers was sentenced to 18 months’ imprisonment and $40.7 million in fines.
Exit ICO scams are those where the ‘founders’ of the scheme advertise a potentially profitable ICO and then disappear after raising some money. PlexCoin was the biggest exit scam ever, having received $15 million from investors by December 2017 before they were caught. Having advertised returns of 1,354%, the SEC froze their accounts and charges are pending.
Unlike PlexCoin, the founders of Benebit have never been caught. This particular ICO exit scam raised between $2.7 million and $4 million before the website and all information was pulled off the internet without a trace.