ICO’s CrowdFunding Fraud, In The Name Of BlockChain Technology.
As per a report released today by the Stanford Law School Securities Class Action Clearinghouse and Cornerstone Research have recorded more than 6% of the securities class action filings made in 2018 against the ICO projects. Due to these all reports presented by the companies, a trust factor for the startup projects such as ICO’s seem to be diminishing in future. More than 80 percent of these projects fail to operate as per the highlights in their Technical White-Paper illustrated by the company which in return proves to a total loss for the investors.
As per the report, his year has hit by a record for federal lawsuits related to complaints against ICO’s and the new fundraising method that lets entrepreneurs raise capital by selling tokens on the name of blockchain technology. Cornerstone asserts that 750 securities class action filings have been made since mid-2016 – describing such as comprising “the most prolific 24-month period since the Private Securities Litigation Reform Act of 1995 (PSLRA) was established.” Stanford Law School professor, “Joseph Grundfest” who is also a former commissioner at SEC after going through the report presented by the company said that:
“Class action securities fraud disputes continues to affect a large percentage of people globally using the name of blockchain technology. The high percentage of fraud filling in the middle of this year is going to increase as this year ends.”
The Graph below by Cornerstone Research company shows a quick review of increasing fraud cases filed against ICO’s and cryptocurrencies.
ICO’s and Crowd Funding
The ICO’s have nevertheless raised to around more than $20 Bln, since the year 2014, with the total amount raised in 2018 surpassing all of 2017 earlier this year. Six of the seven class actions filed this year are still active, as per the report by Stanford Law School Clearinghouse.