Another scam has rocked the cryptocurrency industry, and this one cost investors USD 375,000. The Confido ICO has turned out to be a fraud, with the founders skipping town with the money that was raised in the token sale. Any online activity tied to the Confido ICO, such as the website and social media pages of the startup and its executives, including a LinkedIn profile, have vanished. A third-party service firm that had worked with Confido called the deal an "exit scam" and indicated it would call the Feds, according to CNBC.
Confido was supposed to design smart contracts that would serve as escrow in transactions between a buyer and a seller, using the blockchain to remove the friction such as a third-party to hold the funds. Confido did turn to a third-party platform, however, to facilitate its crowdsale. TokenLot helped the startup to raise the USD 375,000 in the ICO and has not been able to reach any of the Confido founders since.
The Confido ICO is precisely the type of scam that regulators have been warning investors about. And it hasn't just been regulators. Blockchain veterans have similarly come forward to denounce the "many" initial coin offerings that are frauds and offer no value to investors. Confido is a perfect example of this. Its CFD token has plummeted in value from USD 1.20 one the heels of the ICO to just fractions of a penny today.
Signs of Trouble
What's disturbing is that the Confido ICO l had all the makings of an ICO that was on the up-and-up. The startup was led by a team who are eBay and PepsiCo alumni, for instance. That makes it all the more surprising that they have since gone missing with the funds.
There were some signs of trouble after the ICO when the startup's founders took to a blog post to describe a "tight spot" and "legal trouble" surrounding a contract they signed, which is ironic considering they were supposed to be in the business of smart contracts themselves.