It’s been widely reported that 80% of ICOs in 2017 were scams. Do ICO listing sites have a responsibility to report on and prevent this fraud?
ICO Listing, Fraud Prevention, and Personal Responsibility
The time has come for ICO listing sites to decide what they want to be. Do they want to be the 21st century equivalent of the Yellow Pages, listing rote information and doomed to eventual obsolescence, or do they want to actually serve as a useful tool that the crypto community can trust?
If you’re not old enough to remember using the Yellow Pages, you didn’t miss much. It was a big bulky book, and all it listed was the facts: business name, address, phone number. Businesses could pay for larger, advertisement-style listings to promote themselves. The Yellow Pages weren’t concerned with who was actually the best pizza restaurant in town, or if a pizza restaurant had a history of being shut down for health code violations. All they cared was that you were filed under P for Pizza and you had a phone number.
A lot of crypto ICO list sites seem to have decided they’re fine with being the Yellow Pages. They provide the basic information – ICO name, website, start and end date – and let potential investors take their chances. Others have decided to take a 21st century approach, but not an ideal one. They’ve adopted the attitude of an Instagram influencer – pay them enough money, and they’ll say whatever you want about their ICO.
Where’s the integrity? Where’s the trustworthiness? Where’s the dedication to the health of the industry?
2017: Year of the ICO, or Year of the Fraud?
The crypto community and the mainstream media are largely in agreement – 2017 was the Year of the ICO. According to Coindesk’s ICO Tracker, 2017 saw 343 ICOs, as compared to 43 in 2016, and seven each in the two previous years. Now 2018 is set to vastly outpace 2018, as there have already been more ICO projects than there were last year, and we still have five months left to go.
And so, while was may see more ICOs every year, 2017 will go down as the year that saw the largest jump in number of ICOs and the largest surge of interest. Unfortunately, this also resulted in an uptick in ICO related fraud, and all the negative attention that brought along with it.
Thanks to fraudulent ICOs, there are chunks of the population who now think that all cryptocurrency projects are a scam and the whole crypto industry is just one big pyramid scheme waiting to collapse. Governments are rushing in to protect their citizens from hucksters shilling worthless coins.
Cointelegraph recently reported that Bermuda’s government has introduced legislation concerning ICOs. Any Bermudians looking to launch their own coin offering will have to provide “detailed information” about everyone involved in the project. It appears that Bermuda at least will have no tolerance for fake social media profiles and stolen stock photos.
The original dream of cryptocurrency was a decentralized currency, free of governments and big banks. Unfortunately, the crypto industry has been unable to self-regulate to a large enough degree to prevent wide-scale fraud, and now the governments have decided it’s time to intervene.
The Responsibility of ICO Listing Sites
Is it the responsibility of ICO listing sites to weed out the frauds and scammers? Well, nobody else seems to be stepping up to do it. Since it’s not unusual for an ongoing ICO list to also include a rating system, it stands to reason that they should be doing their due diligence to spot the red flags of a scam.
Let’s bring it back to pizza and the Yellow Pages. Back in the day, your pizza restaurant could purchase a half-page ad in the phone book stating that you had the best pizza in town, that your chef was from Italy and your pizzas were cooked in a wood-fired oven imported from Sicily. The Yellow Pages would take your money and put that add on the proper page and prospective customers would call you to order a pizza.
A restaurant critic, on the other hand, would not take you at your word. They wouldn’t sit down at their computer and write a review that parroted whatever was included in the press release you sent the newspaper to announce your new pizza restaurant. A critic would go to your restaurant and order a pizza. They’d taste it. They might ask to meet the chef and look at your oven. And if they discovered that your Italian chef was a guy named Billy Bob from Arkansas, your oven was standard issue from the restaurant supply company, and you were just reheating frozen pizzas purchased from a wholesaler, well… They’d be duty-bound to report this in the newspaper and save their readers from buying overpriced frozen pizza.
It’s easier to just provide an ICO list with the information provided to you by the ICO’s team, or gleaned from the internet by your crawling bot. But look what taking the easy path has gotten us – millions in lost currency, and a tarnished reputation.
For an upcoming and ongoing ICO list to really serve the community, it needs to provide quality, up-to-date information that has been fact-checked. Taking the extra time to confirm facts and organize them neatly results in a list that truly serves as a valuable tool for the crypto sphere.
We Have to Self-Regulate, or Be Regulated Out of Existence
The responsibility falls on the crypto community to call out and ostracize the bad actors, and to do our best to protect newcomers to the scene. Sadly, the volatile price of bitcoin and the profits promised by scammy ICOs mean that many people have recently been attracted to the crypto sphere as a money-making opportunity. Ignorant of how the blockchain works and blinded by their own greed, they fall into the trap of the first get-rich-quick scheme they see, whether it’s a fraudulent ICO or a deceptive crypto exchange.
How much responsibility do we have to shepherd these would-be bitcoin millionaires? While it’s tempting to say “A fool and his money are soon parted” and let them make their bad decisions, the truth is that every successful scam is another blow against the credulity of the entire crypto industry.
So what do we do to protect people from their own poor instincts? We can’t tell people how to invest their money, but we can offer advice. Cryptonews published a piece on 12 questions to ask before investing in an ICO. This is perhaps the best way to handle it. By empowering people to investigate ICOs on their own, we let them come to the right decision on their own rather than forcibly leading them away from bad projects.
According to a recent report by Statis Group, as reported in Crypto Currency News, 80% of ICOs conducted in 2017 were scams. Can an ICO list stop people from attempting scams? No, that’s clearly beyond their power. But they have the ability to call a spade a spade, and point out the scams before they collect millions in investments.
The crypto community has to find better ways to self-regulate and make it harder for scammers to thrive, or we risk being regulated out of existence by over-zealous governments. It’s time to take a more active role in calling out scams and promoting the projects that actually stand a chance of succeeding and making the world a better place.