10 Largest ICO Scams

ICOs have been the most controversial thing to hit the finance world since Bitcoin. Love them or hate them, ICOs are here to stay.

They have been the hottest topic in the cryptocurrency, hedge fund, and venture capital worlds, blurring the line between the formalized structure of the traditional startup fundraising process via IPOs and anarcho-capitalist crowdfunding online.

It’s basically a scammer’s paradise. Known cryptocurrency experts like Tone Vays and Jason Seibert, believe that every single ICO is an unlicensed, unregistered security, to the chagrin of many Blockchain proponents. It’s hard to argue with Tone and Jason when the SEC has basically said the exact same thing themselves.

Lawmakers are stuck between a rock and a hard place as they would like to crack down on scammers, fraud, and thievery in the industry, but at the same time they do not want to overreact, or create legislation around technology they don’t fully understand and unwittingly strangle a potentially world-changing revolution of technological innovation in its infancy.

At the same time, they see they see the amazing influx of capital into the fledgling industry, mostly from unqualified retail investors, with no regulatory oversight, and an amazing amount of scams and financial chicanery proliferating and catching inexperienced investors off guard until it’s too late.

In today’s article, we will be taking a look at the biggest ICO scams ever.

The 10 biggest ICO scams in history

1. Pincoin and iFan

  • $660 million USD stolen from 32,000 people
  • 2 ICOs launched by the Vietnamese cryptocurrency company Modern Tech
  • Claimed ICOs were based out of India and Singapore
  • Claimed to be an ERC-20 token

This is the largest cryptocurrency scam in history as of this writing. This scam reminds me of the movie Ocean’s 11 or Goodfellas. It is an epic amount of money that the thieves were able to steal, and they were able to make off with the loot successfully.

Authorities released the names of 7 Vietnamese nationals behind the scheme, but they were able to pull an exit scam and flee the country before investors or investigators even knew what happened.

As far as I can ascertain from the English press, none of the suspects have been apprehended, to date. I imagine they are enjoying the good life with their ill-gotten gains somewhere on their own private island.

2. AriseBank

  • $600 million USD “allegedly” raised in the AriseBank Private Sale and ICO
  • AriseBank paid former world boxing champ Evander Holyfield to be a spokesperson
  • Falsely claimed AriseBank had acquired a 100-year-old FDIC insured commercial bank
  • They falsely claimed they had a partnership with VIsa and were launching a payment processing platform

AriseBank is a story about a scam so blatant it’s almost hard to believe. The SEC went so far as to even call it “an outright scam” in the complaint filed in US federal court.

The CEO of AriseBank Jared Rice is a high school dropout turned self-proclaimed Dallas rap promoter who has a book on the way with the title “From Trap Houses to Penthouses: My Journey From Gangs, Drugs & Pimps To Building A Global Internet Empire”.

Rice made false claims about buying a bank, partnerships with Visa, a payment processing service and many other fraudulent statements to dupe investors. The authorities finally stepped in due to the absurdity and blatant disregard for the law.

3. OneCoin

  • OneCoin founder Dr. Ruja Ignatova, is a Bulgarian national. She has many false degrees and credentials just like FakeSatoshi
  • OneCoin is a laughably obvious Ponzi scheme that had a global reach (rumored to have stolen 300+ million USD internationally)
  • OneCoin acquired  the lists of many previously collapsed Ponzi schemes and markets itself as a way for them to make up what they have lost
  • Many countries have issued scam warnings about OneCoin
  • $30 Million USD was seized and OneCoin promoters were arrested in China

OneCoin is another scam that is so obvious it just leaves you scratching your head wondering how they were able to get anyone to fall for it. It was global in scope operating in many countries, preying upon the ignorant and desperate that eagerly believe fairytales about getting rich quick.

OneCoin’s founders have no knowledge of how cryptos actually work and their sales pitch is laughable to anyone that has even a rudimentary knowledge of cryptocurrency. That being said, they were still able to steal millions globally.

4. Bitcoiin

  • Raised up to $75 million USD
  • Bitcoiin’s only remarkable quality or claim to fame was hiring Steven Segal the washed-up Hollywood action movie star, as their spokesperson, which is hilarious
  • Bitcoiin was a “closed source” code base that claimed it would become open source

The Bitcoiin scam ICO was just another one of many symbols of the over-the-top fever pitch enthusiasm for ICOs that finally made regulatory agencies worldwide step in and begin to devise regulation for the burgeoning market.

Steven Segal’s endorsement came at a time when celebrities were paid to entice investors into shady startups, and he received media criticism as a latecomer, it didn’t help when the project collapsed as a scam. They even had the audacity to launch a “Bitcoiin 2nd gen”.

5. Paragon

  • Raised up to $70 million USD before authorities stepped in
  • CEO Jessica Versteeg was a former Miss Iowa 2014
  • Paragon hired celebrities like the rapper “The Game” to promote their ICO
  • Paragon tried to use the popularity of US cannabis legalization trends to cash in on the ICO hype
  • The Paragon team just took the ICO money and invested in real estate instead, allegedly

Paragon was another ICO that used shameless tactics like a sexy supermodel CEO, and popular rapper spokesperson to swindle investors during the height of the ICO frenzy.

Paragon was actually laughed at by many media outlets for its overall scammy nature at the time of its ICO, so I am at a loss to explain how they raised $70 million which they misappropriated to purchase real estate. I can only say that they took advantage of the public enthusiasm for all things blockchain, and legal cannabis to defraud the naive.

6. Centratech

  • Centra illicitly raised over $32 million USD in their token sale
  • Centra was another shameless ICO hiring celebrities like DJ Khaled and legendary boxing champ Flloyd Mayweather Jr. to unwittingly promote the scam
  • They created fake team members along with fake Linkedin profiles
  • They completely fabricated partnerships with Visa and Mastercard to scam crowdsale participants

Centra was a company that purported to be a cryptocurrency debit card allowing users to convert their coins to fiat. They did all the standard ICO scam steps like hire celebrities, and lie about critical business relationships.

They even went so far as to create fake people and social media profiles to create fake credibility. Finally, authorities stepped forward to apprehend these scammy scumbags.

7. Plexcoin

  • Plexcoin raised $15 million fraudulently
  • Plexcoin was a scam based out of Quebec, Canada
  • They didn’t release a whitepaper until after their presale
  • The SEC called PlexCoin a “full-fledged cyber scam”
  • Was ordered to postpone the ICO by the regulatory agencies in Quebec and proceeded with the token sale

Plexcoin was billed as the “next cryptocurrency” but it was nothing more than an elaborate scam. Plexcoin offered outsize returns, claimed to have a visa card and used the classic scam claim of “better than Bitcoin” and made other vague claims about the technology. The fantasy all came to a screeching halt when the SEC filed a complaint on the heels of the Quebec regulators cease and desist order, leading to the arrest of the founder Dominic Lacroix.

 

8. Prodeum

  • Prodeum allegedly managed to scam $6.5 million USD
  • Prodem claimed to be a blockchain startup for fruit and veggie supply line logistics
  • Prodeum’s name was similar to a medication for a urinary tract infection
  • When the scammers made their exit, they took down their website and left only the word “penis” in a juvenile show of disdain for their victims.

Prodeum was a Lithuanian blockchain for fruit. I know it sounds ridiculous but apparently, enough people thought Ethereum needed a fruit blockchain that the scammers were able to fleece investors of $6.5 million, and then to add insult to injury they took the website down and left a terrible joke worthy of a third grader. Besides the reference to male genitals, the Prodeum team was known for paying women on fiverr for writing Prodeum on their bodies. A supposed blog by the scammer claimed they never made millions from the scam, only three thousand dollars.

9. Benebit

  • Benebit stole an estimated $3-4 million USD
  • It was a really well thought out and premeditated scam with a $500,000 USD marketing budget
  • Benebit was found out when someone noticed the pictures for the “team” were stolen photos from a UK school website

Benebit was an elaborate scam that had an anonymous team of scammers that were able to masquerade as a serious ICO. They had a large and convincing social media following and a cleverly produced white paper which had an air of legitimacy. They managed to put together a well-funded marketing campaign and only pulled their exit scam when fake photos of the team members and fraudulent passport data came to light.

10. Seele

  • The thieves were able to get away with $2 million USD
  • Seele was not an ICO scam in the sense of the others in this list
  • Seele was targeted by hackers who impersonated team members in their telegram group
  • The hackers were able to convince members of the telegram group to send them ETH for a “private sale”

The attackers pretended to be two of the admins on Seele’s Telegram channel. They then offered “private sales” of tokens just days before the ICO. Members of the Seele Telegram community were duped into sending Ether to the wallet of the thieves. The thieves were able to abscond with almost $2 million in stolen ETH, before the Seele team was made aware and was able to alert the community. Seele was finally able to make the community aware of the scam, but it was already too late.

Did we miss an ICO? Let us know in the comments.

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