Summary: Cryptographer and Blockstream CEO Adam Back expressed disappointment that initial coin offerings in the crypto space have become tainted by scams in a recent Twitter thread. Back blamed mainstream conversations centering around initial coin offerings designed to scam investors for poisoning the perception of crypto initial offerings. He lamented that people have tagged the procedures for an ICO ...
Back blamed mainstream conversations centering around initial coin offerings designed to scam investors for poisoning the perception of crypto initial offerings. He lamented that people have tagged the procedures for an ICO as hallmarks of a scam.
In 2019 scammers brought in $4.3 billion worth of revenue with ponzi schemes accounting for 92% of that revenue, according to blockchain analytics firm Chainanalysis. $8.6 billion of total crypto transactions volumes in the same year was traveling either to or from illicit accounts.
Fraudulent ICOs seem to pop up across crypto headlines at least every week with the perpetrators promising innovative new technology, flashy partnerships, and, of course, high returns on investment. The orchestrators of these scams then use victims' investments for personal expenses.
A 2018 study conducted by ICO advisory body Statis Group found that more than 80% of initial coin offerings conducted in 2017 were tagged as scams. The majority of ICOs being scams has led many to dismiss ICO investments immediately, a habit which Back said hindered the ability of legitimate projects to gain traction. He went on to state that scams killed the potential of building projects with a reputation based on investors rights through ICOs leaving room only for professional investors.
Last month Back compared Ethereum to ponzi schemes like BitConnect or OneCoin in a separate Twitter thread. He said in an interview with TV journalist Layah Heilpern that Ethereum wasn't adding value to the industry and stated that a 70% pre-mine delegitimizes the project along with prominent platform Ripple. Ethereum co-founder Vitalik Buterin dismissed his comments as tired old propaganda.
By Emily Mason