A cryptocurrency startup based on the ethereum network in early November raised close to $375,000 USD in just two days and this past Sunday, the founders, and startup have completely vanished.
Confido raised its thousands from investors from November 6 to 8 on the platform TokenLot, in an Initial Coin Offering (ICO) fundraiser. These investors were given “contract for differences” tokens and were traded for as much as $1.20 on November 14th but dove down to $0.02 cents, leading up to their disappearance.
On Sunday, the company very informally removed their website and deleted their twitter and facebook accounts. Confido’s Founder, Joost van Doorn, posted a short comment to the company’s now-private forum on the company Reddit claiming ‘legal trouble’ and being in a tight spot due to a contract, as their reasons for shutting down.
Van Doorn said:
“We signed the contract with assurance from our legal advisor 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. It is likely that we will be able to find a solution to rectify the situation. However, we cannot assure you with 100% certainty that we will get through this.”
The exact post was also added to the website Medium but deleted immediately after. The founder has zero internet presence and has since removed his LinkedIn profile. A cached version of the ole website stated that Van Doorn had a master’s degree in international business and previously worked at places such as PepsiCo and eBay.
A representative from the company named, Chris-Confido Support, responded to the Reddit Forum post and states the removal of the site and social media pages was a “complete surprise” to him.
There are many skeptics and question the credibility of this “support” person.
Confido’s market cap as at $10 million USD last week but now the tokens are worth absolutely nothing and investors are furious.
An investor on the very popular cryptocurrency forum, Bitcointalk, stated, “I got scammed big time, this is a very valuable lesson for me in both senses of the word.”
Right now it is completely unclear what will happen to the $374,000 USD that the investors put into the start-up. The company that facilitated the transactions of the token sale, TokenLot, is probably having a very busy day responding to the highly disgruntled investors and trying to figure out what happened.
Will one small group of people wanting to commit fraud, ruin ICOs for the rest of the startups? ICOs have skyrocketed as it allows these companies to raise huge investments in lightning-fast funding rounds, versus the traditional VC route.
There are some people in the cryptocurrency space, that are completely against these coin offerings. Recently the CEO of Ripple, the fourth largest cryptocurrency by total value, told CNBC that “a lot of what is happening in the ICO market is actually fraud.”
Currently, ICOs are banned in China and South Korea but are unregulated elsewhere. This means when an investor decides to invest, they do not have any protection should an event like this take place.
There are many regulators with their eyes fixated on these coin offerings and are trying to figure out how exactly to deal with them, without completely banning them. Authorities in Abu Dhabi just revealed rules to bring these ICOs into the regulatory fold.
Featured Image: Depositphotos/© MasterOk