New research by Ernst & Young has been officially out, claiming that over 10% of all the funds raised in the initial coin offerings (ICOs) have been either stolen or lost. The findings have come alongside a new report that is detailing what Ernst and Young believes to be a risk of investing in such low-regulated market.
The truth is, hackers were found to phish and feast on ICOs, and Ernst & Young just told the public the truth. Collaborating with Group iB, they analyzed more than 372 ICOs in the cryptocurrency market. Still,, the professional firm did not designate a certain timeframe for their findings but only pulled data from “public sources across exchanges, ICO reports and trackers or data aggregators”.
The findings were simple. Concerning the ICOs in question, there are more than $400 million out of $3.7 billion in fundraising capital that was stolen or lost. The stolen funds were mostly done through phishing accounts to trick ICO participants into sending cryptocurrency or fiat currency to fraudulent website. The lost funds, on the other hand, were due to the forgotten passwords by the users.
Ernst & Young has shown that hackers made away with as much as $1.5 million from all the stolen funds through phishing only. In an interview with Reuters, Paul Brody who is the company’s main innovation leader, attributed the drop-off to poorly constructed projects that lack quality.
“We were shocked by the quality of some of the white papers, we see clear coding errors and we see conflicts of interest between the companies issuing tokens and the community of token holders. The volume just exploded, people raised their fundraising goals and the quality just dropped,”
At this point, it is wise to do proper research before investing in an ICO – especially because the entire thing is largely unregulated.
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