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Fraudulent ICOs Have Raised More than $1 Billion: WSJ

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ICO scams are said to have raised in excess of $1 billion since the cryptocurrency boom began, according to a new report published by The Wall Street Journal. Though the findings will likely be contested by investors, the report provides compelling evidence that a large number of coin offerings rely on fraudulent tactics to attract investors.

The Rise of the “Shitcoin”

Of the 1,450 initial coin offerings (ICOs) reviewed by WSJ, 271 were flagged for potential fraud. Combined, these projects generated nearly $1.1 billion in funding from investors who bought into dubious claims about guaranteed returns and huge ROI. That represents 21% of the total amount raised across the 1,450 projects, which are believed to encompass most of the ICOs targeting English-speaking investors.

Since 2017, ICOs are said to have generated more than $9 billion globally, according to data provided by Satis Group.

Although fraud isn’t always seen as black and white, WSJ analysts outed projects with plagiarized investor documents, promises of over-sized gains and incomplete or fake executive teams.

In the crypto world, these token projects are often referred to as “shitcoins.” A shitcoin refers to any altcoin that is said to be worthless because it lost value, failed to generate interest or was not created in good faith.

ICO Market: Bad Press Continues

This isn’t the first time researchers have drawn troubling conclusions about the ICO market. By February, it was shown that nearly half of all ICOs launched last year had already failed. A further 13% were labelled as “semi-failed.”

Deceptive ICOs are only one part of the problem. According to Ernst & Young, roughly 10% of ICO funds have been lost or stolen by cyber criminals looking to capitalize on the insatiable demand for digital currency projects.

ICOs themselves are also struggling to meet their funding-cap goals. By November of last year, only one-in-four ICO projects reached their fundraising target compared with 90% in June.

Token raises have generated nearly $4.6 billion in funding over the last five months, but funding amounts have declined sharply since the year began. The month of May is shaping up to be one of the smallest hauls for token projects since the crypto boom began in early 2017.

Earlier this month, Australia became the latest country to target “deceptive” ICO projects that promote “misleading or deceptive” statements.  An inquiry by the Australian Securities and Investment Commission (ASIC) resulted in several companies either modifying their ICO projects or halting them entirely.

The U.S. Securities and Exchange Commission (SEC) has been highly critical of ICO projects, arguing that all of them meets the traditional definition of a security.

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.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 465 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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CNBC Holds Funeral For Bitcoin

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CNBC show “Fast Money” held a supposed funeral for Bitcoin on their show this evening. The tongue-in-cheek ceremony occurred due to the hosts citing the BitThumb hack and today’s corresponding big drop in crypto asset prices across the board.

This is not the first time CNBC, or “Fast Money” in particular has made controversial statements about the original cryptocurrency Bitcoin.

Brian Kelly, for instance, has previously compared cryptocurrency to the “Internet in the 1980s,” emphasizing that Bitcoin is still in its early stages in an April 13 interview on CNBC’s Trading Block.

Also in April, Kelly mentioned a report by analysts at Barclays which referred to cryptocurrency as a “virus” and an infectious disease that would never hit another high again.

In tonight’s episode of “Fast Money”, Kelly noted that the moment right after negative articles are published is exactly when he “wants to buy any asset, whether it’s Bitcoin or not.” Kelly also stated recently that he supports Tim Draper’s assessment that Bitcoin could hit $250,000 by 2022.

So the “funeral” is really a mockery of Bitcoin critics who have a tendency to proclaim the death of Bitcoin every time a negative story hits the press.

The best example of this was obviously when Jamie Dimon of Chase Bank called Bitcoin, “a fraud.” When prices subsequently dropped, Chase was one of the largest buyers of Bitcoin.

During tonight’s “funeral”, Kelly gave four main reasons for why he’s bullish on Bitcoin.

1. Bitcoin is approaching historic lows in terms of both sentiment and prices for the year 2018.

2. He views a recent Japanese government statement ordering exchanges too, “improve business conditions”, while rough in the short term due to a temporary freezing on the creation of new accounts, will actually contribute to a more vibrant market in the long term.

He further clarified that this action by the Japanese government was tantamount to, “cleaning up the system.”

3. Mt. Gox announced that they are going to distribute the rest of the over 1 million in Bitcoin they still have to victims of the 2014 hack. Notably, however, this would not occur until Q1 of 2019 at the earliest. This in Kelly’s view creates a sleeping bull market event waiting to happen.

4. There are not enough Bitcoin futures trades shorting Bitcoin to affect the price negatively in a significant way.

Kelly concluded the segment by making the argument that Bitcoin is due to have a huge price spike. He elaborated on this by noting the similarity in trading charts to a previous spike a couple years ago.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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You Can Now Play Pokémon On The Blockchain

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A common trend in the past two years is adding “but with blockchain” to the end of any platform, business, or idea and having it result in instant hype. A good example of this occurred when Long Island Iced Tea changed their name to “Long Blockchain” and had their share prices soar 500%.

Whether there is a valid use case for adding blockchain technology to goods and services remains a valid question best evaluated on a case by case basis.

In the latest example of this trend, software engineer João Almeida created Poketoshi, which is a platform that lets you play Nintendo’s iconic game Pokémon via the Lightning Network.

The game is hosted Twitch and works just like the rest of Twitch’s ‘Twitch Plays Pokémon’ games. The games work by reading commands entered into the chat room by users. In Poketoshi, the commands are instead entered through a Lightning-enabled virtual controller.

Users enter a set of commands through the controller and have to pay 10 Satoshi per command through Lightning Network. The payments are made through OpenNode, which is a Lightning-enabled bitcoin payment processor for merchants.

The reason Poketoshi fits the above trend description so well is that the Lightning Network doesn’t make the user-experience of playing the game better whatsoever. The platform is just aimed at being a proof of concept for the utility of Lightning Network to enable fast and cheap transactions.

To recap for our readers, the Lightning Network is an additional layer that sits on top of a cryptocurrency’s blockchain to make the transactions faster and cheaper. While the technology is still in the testing phase, the early results are extremely promising.

The additional background for the Lightning Network is that there has been a long-standing rivalry between Lightning Network (who favor it as a solution to scaling bitcoin) and bitcoin cash (BCH) proponents.

Poketoshi users didn’t stop from taking digs at the Bitcoin hard fork during the gameplay itself either. Many users chose to name their in-game rival ‘BCASH,’ and shared screenshots on Twitter, in a humorous intersection of Pokemon trainer rivalry crossed with the actual rivalry between bitcoin and bitcoin cash.

This is also not the first time that a developer has created a fun way of testing the Lightning Network. Past examples include a Lightning-powered drawing board as well as a candy dispenser that lets users pay with via Lightning Network.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Congresspeople Now Required To Disclose Crypto Holdings

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Secret HODLING by politicians is about to have its moment under the microscope.

According to a June 18 memo issued by the House Ethics Committee, U.S. House members were advised this week that they must now publicly reveal any digital token holdings worth more than $1,000.

Lawmakers are also now required to reveal any cryptocurrency sales or purchases that exceed $1,000 within 45 days of the transaction date.

The memo further stipulated that congresspeople should include such investments in their annual financial disclosure reports.

The timing of the memo is intriguing. For decades, congresspeople and their employees have been legally required to disclose assets like real estate and investment proceeds.

The enforcement of these rules got even stricter after the passage of a 2012 law requiring disclosure of stocks, bonds and derivatives trades by members of Congress or their family members.

The rise of cryptocurrencies, alongside questions over how and if they should be regulated, has generated a lot of uncertainty over how existing rules should apply to lawmakers’ purchases of Bitcoin and other crypto tokens.

In theory, it could expose hypocrisy by lawmakers that condemn cryptocurrency as a fraud or national security risk but profit off them in the shadows.

The release of the house memo means that the public will soon learn exactly which lawmakers are invested in crypto assets. This mandated reporting forces lawmakers who take strong stances either way on the regulation of crypto assets to literally put their money where their mouth is.

The memo also addressed whether members of Congress are allowed to make money through side gigs tied to cryptocurrencies.

The memo clarified that House rules going forward prohibit lawmakers from earnings of more than $28,050 a year from jobs unrelated to congressional duties will also apply to cryptocurrency mining.

This should, therefore, eliminate the temptation for lawmakers to use cryptocurrency to skirt the rules.

These rules coming out of the memos are likely a good thing for the blockchain industry as a whole going forward. This is due to to the fact that implementing universal standards for lawmakers will eliminate potential areas of corruption.

Since a huge focus of governments worldwide around crypto assets has been their potential for use in illicit or criminal activities, it would be tremendously embarrassing if politicians themselves were using cryptocurrency for these purposes.

That being said, for savvy lawmakers, it is probably relatively straightforward to hide the assets that they do have/had.

For instance, all one needs to avoid suspicion is a non-verified account on a decentralized exchange with a hardware wallet. In the view of this analyst, the odds of a lawmaker personally owning crypto assets while not being remotely technically inclined is near zero.

As a result, while the new standards are absolutely necessary going forward, I don’t know how much of an impact they will really have.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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