2 months ago
Cryptocurrency News

Cryptocurrencies Plunge, ICOs Report Shows Widespread Deception

Investing.com - Cryptocurrencies tumbled Friday morning in Asia after reports linking some initial coin offerings (ICO) to frauds, implausible returns

Investing.com - Cryptocurrencies tumbled Friday morning in Asia after reports linking some initial coin offerings (ICO) to frauds, implausible returns and plagiarism.

Bitcoin dropped 4.47% to $3,594.6 and Ethereum slid 11.8% to $114.47 at 10:55PM ET (02:55 GMT). XRP plummeted 10.17% to $0.33742 on the Poloniex exchange while Litecoin also lost 8.18% to $27.961.

The Wall Street Journal analyzed 3,291 “white papers” of cryptocurrency projects that launched new ICOs and reported that 16% of those papers included instances of plagiarism, identity theft and false promises of too-high returns. The white papers are informal information documents used to market ICOs.

More than 2,000 of the white papers analyzed included sentences with terms such as “nothing to lose” or “guaranteed profit” as well as “highest return”, “high return”, “no risk” or “little risk.” Some 343 crypto projects were linked to fake team members.

Regulators in the U.S. cracked down on ICOs and cryptocurrency-related investment products in August as part of an initiative by the North American Securities Administrators Association. Currently, more than 200 projects under investigation by regulators.

“Investing in an ICO is like speculating in a highly promoted junior gold mining company where the prospect of finding actual gold is nil. There will be price volatility and plenty of promises made. But in the end, the investment is worthless. And it was always going to be worthless,” Jon Markman, president of Markman Capital Insight, wrote in an article on Forbes on Thursday.

Japan’s Mizuho Financial Group, on the other hand, is backing cryptocurrencies and planning to introduce in March its own digital tokens that can be used via its smartphone application, according to the Nikkei Asian Review. The digital currency will be pegged to the Japanese yen and retail shops that use the new tokens may be charged fees lower than those charged by credit cards. Mizuho also intends to bring 60 regional banks on board with this new currency.