Investors have sent $1 billion into digital coin projects that flash
warning signs for fraud, The Wall Street Journal reported Thursday,citing its own
In a review of 1,450 digital coin offerings, the Journal said it found
that 271 bore red flags such as plagiarized documents or fake executive
information. Investors have already claimed losses of up to $273 million in
these projects, the newspaper said, according to lawsuits and regulatory
The coin sales, or "initial coin offerings," give investors
the chance to buy into a new digital token while letting developers get easy
access to funding. The process may be a little too easy for many projects that
are unproven or outright scams. Coin offerings have raised roughly $9.8 billion
in the two years through mid-March, according to financial research firm
The Journal found widespread plagiarism in 111 projects' online
whitepapers, including word-for-word copies of marketing plans and technical
features. The demand is so high that freelancers will write the papers for $100
or more, the report said.
Lifting images and names to create the appearance of a reputable
development team is also not uncommon.
One Polish banker named Jenish Mirani found that his profile picture was
used by online payment project Denaro to portray its co-founder "Jeremy
Boker," the Journal said. The paper said no one responded to its attempts
to reach the company.
Many initial coin offerings officially prohibit U.S. citizens and
residents from participating, out of fear of regulatory crackdown.
The U.S. Securities and Exchange Commission has frozen assets and
charged founders with fraud in several cases of cryptocurrency scams. On
Wednesday, the SEC also launched a website called "HoweyCoins.com"
to show investors what a fraudulent coin offering might look
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