Confido ICO Has Vanished With $374,000 of Investor Funds
Ethereum-based startup Confido has seemingly vanished after raising $374,000 USD from investors over a three-day token sale earlier this month. Now, investors are wondering if they’ve been duped or simply let the ICO craze blind their judgment to a company that faced legal troubles from the get-go.
Scam or Legal Trouble?
The company explained the situation on its now private subreddit page. The based people at TrustNodes.com captured a screenshot of a post made by company founder Joost van Doorn.
“Thanks for always standing by us. We have achieved some incredible things these last two weeks, and the crypto space is beginning to notice us. However, we ow you an apology. Right now, we are in a tight spot, as we are having legal trouble caused by a contract we signed. We signed the contract with assurance from our legal advisors that there was minimal risk and it would not be an issue. I can’t and won’t go into details, but he was wrong. It is a problem.”
“I, Joost van Doorn, want to personally apologise for any financial damages this announcement will cause to people. It was never our intention to hurt investors’ we didn’t see this coming.”
Although van Doorn’s explanation appears sincere, it might not be enough to convince the investors who poured money into the project.
The Confido project leveraged smart contracts to process payments via escrow between buyers and sellers. The token raise was held between Nov. 6-8.
At the time of writing, Confido’s website and social media channels are all down, except for its YouTube page. The Confido token also suffered a meteoric drop in value as investors took in the announcement.
Shady ICO Business
The Confido debacle has once again shined negative spotlight on ICOs – a market that lawmakers have struggled to define and regulate. As more ICOs vanish or go belly-up, governments may feel that their efforts to clamp down on token raises are justified. China, South Korea and others have already moved to ban coin offerings entirely. In the United States, the Securities and Exchange Commission (SEC) has taken a tough stance on delineating between so-called utility and security tokens.
Token raises generated $3.25 billion in the first ten months of 2017. Although capital continues to flow into ICO projects, the market appears to have slowed in recent months. This is true when we consider the total amount of funds raised month-over-month, as well as the size of the median token raise.
Ethereum founder Vitalik Buterin has warned that the market will see more crummy ICOs in the near term. However, this shouldn’t dissuade investors from identifying gems. In fact, those gems will be easier to find as the technology and business models behind token raises improve. Buterin calls this paradigm “Tokens 2.0,” and says it is only a few years away. In the meantime, investors can expect to see more cases similar to Confido.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.