In a recent study released by US-based independent investment research group, Satis Group, it has been revealed that a quarter of prominent Ethereum initial coin offerings (ICOs) are probably fraudulent.
The primary aim of the study was to evaluate the trustworthiness of popular new tokens and ICOs that hit the market in 2017. The findings showed that out of the 1,450 new tokens, an estimated 271 of them – approximately 19% of the tokens – are considered to be scams. Further, the value of these fraudulent tokens amounts to $1 billion.
The study further found that 81% of the tokens were considered “glorified”, meaning that the product or service on offer did not hold any value. It is likely that these fraudulent tokens were merely created to scam investors out of their hard-earned money.
The study also revealed that many of these fraudulent tokens are associated with potentially fraudulent activities, such as pump-and-dump schemes and other illicit activities. It is well-known that criminals have taken advantage of the cryptocurrency market and its lack of regulation in order to take advantage of unsuspecting investors.
The study raises several questions regarding the trustworthiness of cryptocurrency tokens, ICOs, and the entire cryptocurrency sector. It is essential that regulators and exchange providers work together to make sure that only legitimate companies are listed in their exchanges and that investors are protected from fraudulent offerings. It is also important that buyers do their due diligence when considering investments in ICOs and other cryptocurrency tokens.
The Satis Group study also serves as a reminder that despite the potential for security tokens to revolutionize financial services, it is important for investors to take caution and make sure that the tokens they are investing in are above board. It is wise to check out the company behind the token and their offerings before jumping into an investment. It is also advisable to look for independent reviews of the product or service offered by the company before investing.
In short, the study done by the Satis Group is an important reminder that a lot of fraudulent activities take place in the cryptocurrency market and that investors need to be vigilant when considering investments in cryptocurrency tokens. It is essential that regulators step in to ensure that legitimate companies are offered protection and that investors are protected from fraudulent activities.
