Hackers are Stealing 1.5 Million from ICOs every Month
The phenomenal growth and soaring popularity of cryptocurrencies has led to the rise of the ICO or initial coin offering. It’s just another crowdfunding technique that has attracted a number of startups and combined has raised them roughly $4 billion last year. We’ve previously covered how we predict 2018 will be the year of the ICO here.
Government agencies and regulators have been raising some serious questions about certain ICO practices, and are warning investors about the possibility of fraud. A few days ago, a new report has come into the limelight that coupled with surprise disappearances of a few ICOs may lead some people to be hesitant about the industry.
In the latest of what happens to be a “mind-blowing” story, it is suggested that hackers have stolen roughly 10 percent of the total amount raised in ICOs so far. According to a new report by research firm Ernst & Young, hackers have stolen over $400 million from various ICOs. It is estimated that every month, hackers are stealing roughly $1.5 million from ICOs.
Most of the hackings have been done through phishing attacks, a traditional tool to steal people’s information, identity, and data.
The cryptocurrency market has become the paradise for hackers who are attracted to the speed, volume, and size of the transactions within the industry. The report finds that investors have poured roughly $300,000/second into some ICOs – attracting the evil eyes of those who see the $4 billion in funding as a potential source of “income”.
It is still unclear as to which part of the world has been the biggest victim. However, the United States, Russia, China, Hong Kong, South Korea and Japan are expected to be the prime targets since these are the economies with the largest share in the cryptocurrency market.
If we look at the last year, a number of startups raised a sizeable amount of funding through ICOs. Filecoin raised $257 million, Tezos raised $232 million, Status $90 million, and Bancor raised $153 million. However, the trend is cooling down.
The EY report suggests that roughly 25% of projects met their fundraising target in November, which is 65 percent down from June 2017. Speculations, cyber-security concerns, and regulator’s objections are stated to be the key factors in this downward trend. Regulators have been warning investors and startups about a high risk of fraud.
The study suggests that with watchdogs starting to crack down, the riskier operators are likely to move to the markets with little or weaker or no regulations whatsoever. The prime attraction of the Bitcoin or peer-to-peer transaction was it being free from any regulatory or intermediary oversight, and the risky players will be likely to find avenues to avoid this regulation.
The report also points out at lack of customers and a viable product being key elements adding to the risk involved in many ICOs.
At InWage, we help our clients make their ICOs secure, profitable, and successful. We understand the fundamental regulatory and investment guidelines, and advise our clients accordingly. Get a taste of our approach, in a brief guide that our founder, Jonathan Chester worte for Forbes: Your Guide to Running an ICO, for Better or Worse.