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Are ICOs really a scam?

Oct 30, 2017 Posted /  2567 Views

Are ICOs really a scam?

The blockchain world has many shades, from backing cryptocurrencies to conducting ICOs with cryptocurrencies. Every element of the cryptocurrency world is intriguing and is the new craze amongst many investors who believe in making making money quickly. But, as people call Bitcoin a Bubble, now even ICOs are under scrutiny. China recently had banned ICOs, bitcoin trading and exchanges. Risks and demerits of ICOs have been very vocal from people who do not believe in this process of crowdfunding.

A recent addition in the list of names of people is Jordan Belfort, the infamous wolf of wall street, who has claimed that ICOs are much more worst than what he used to do.

He has urged investors to dismiss the current craze of ICOs, calling them the "biggest scam ever."
In an interview with The Financial Times published Sunday, Belfort has warned the promoters of ICOs were "perpetuating a massive scam of the highest order on everyone."

Are they really a scam?

ICOs have become a primary means of raising funds for projects built on blockchain technology. Companies create and issue digital tokens that can be used to pay for goods and services on their platform or stashed away as an investment. But investors don't typically get equity stakes in a company like they do with an initial public offering (IPO). The projects or firms put out white papers describing the platform, software or product they're trying to build, and then people buy those tokens using widely-accepted cryptocurrencies (like bitcoin and ethereum) or fiat currencies like the U.S. dollar.

All of that is done without any regulatory oversight, and both regulators and members of the financial industry have expressed concern about the potential for money laundering and fraudulent activities.
In September, China's central bank banned ICO funding amid concerns that the exercise may involve financial scams while British regulators have said investors should be prepared for the value of their tokens to drop to zero.

Belfort, who spent 22 months in jail after pleading guilty to securities fraud and money laundering, said while most investors probably did not have bad intentions with ICOs, it would only take a small proportion of people trying to scam the others for it to become a "disaster".

"It is the biggest scam ever, such a huge gigantic scam that's going to blow up in so many people's faces. It's far worse than anything I was ever doing," Belfort told the Financial Times.

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Tags: blockchain technology icos Tokens banned ICO funding financial scams

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