A study organized by ICO advisory company Satis Group reveals that almost 80% of ICOs that was organized last year were scams, at least in their pre-trading stages.
“Over 70% of ICO funding (by $ volume) to-date went to higher quality projects, although over 80% of projects (by # share) were identified as scams,” the company said in its report.
Even for the scam-riddled ICO market, that seems like a bit of a high figure. Looking further into the report, we can find how Satis Group defines scams:
“Any project that expressed availability of ICO investment (through a website publishing, ANN thread, or social media posting with a contribution address), did not have/had no intention of fulfilling project development duties with the funds, and/or was deemed by the community (message boards, website or other online information) to be a scam.”
In essence, this could mean that the ICO advisory group scanned through its sample group of tokens looking for an association with scams mentioned by the public. There’s a problem with this, though.
Because of the decentralized and new-frontier nature of token sales, every new ICO is often accompanied by FUD perpetrated by a significant number of individuals who will do anything they could to prove that it’s a scam. In fact, it happens so often, that it’s just noise to any seasoned investor by now.
This phenomenon occurs mostly because of the lack of a reliable agency that tracks and certifies tokens. There’s no one out there compiling a list of ICOs that could be sketchy, leaving it up to individuals to speculate on the credibility of any token sale.
Cruising lightly through the internet, we can easily find scam accusations everywhere. We even found one particular person saying that Steemit is a scam.
The most interesting part of this accusation is that the user said this on Steemit’s own platform.
Looking just a little further we can also find forum posts accusing EOS of being a scam.
After that, the list just goes on and on, with numerous examples including TRON, Telegram’s ICO, Aeternity, and many others.
If large and established ICOs get this much flak from the cryptocurrency community, it’s easy to imagine more FUD when it comes to much smaller and lesser-known ICOs.
To be fair, Satis Group hasn’t made their methodology abundantly clear. We don’t know whether the company just looked for rumors of scams to draw its conclusions.
However, The Wall Street Journal conducted its own study a while ago and found that roughly one-fifth of ICOs are scams. Its definition and sample size, on the other hand, were much better defined in the publication’s findings and we were able to conclude whether or not this really satisfied the criteria for a “scam.”
For this reason, we will be speaking to someone from Satis Group to get further clarification on the analysis’ methodology and sample size next week. Hopefully, with this conversation, we can gain more insight into how that 80-percent figure was reached.
This story originally appeared in Cryptovest. Image courtesy of Shutterstock.