All the hype about cryptocurrency has been further spurred by the recent developments in the cryptocurrency market. It looks as though scammers have managed to carry out an invalid initial coin offering or ICO and make a run with almost close to $2 million in cryptocurrency. That is not all. The scammers may be even linked to another fraud that has taken place quite recently.
A fake persona was created by using a fake LinkedIn profile and photographs from the Instagram account of another user. The ICO project was named Giza and it managed to attract nearly a 1000 investors in total.
ICOs are a type of crowdfunding. Companies that use ICO do not take investments from venture capitalists. Rather they allow people to hold small shares in the company through investments in cryptocurrency. The public can make investments in cryptocurrencies such as Bitcoin or ethereum in exchange for service offered by the company in the future. The ICO cannot be seen as equity.
The money in ICOs is huge and unregulated. The lack of regulation helps companies raise big money through ICOs. The previous year, companies raised a staggering amount of $3.8 billion through ICOs and this year the amount already stands at $2.8 billion.
The lack of regulations means that investors cannot enjoy the benefits of their investments and scams are on the rise. Regulators are trying to keep an eye open for scams.
Investors for the project Giza thought that everything was going fairly well until they began to notice some red flags. These included a lack of proper correspondence with the founders of the project, inability to recoup their funds, and a falling out with the sole supplier of the company.
The scam is supposedly centered around an individual named Marco Fike, the COO of Giza, someone whom the investors, founders, and employees have never seen before.
The scheme was well-orchestrated and showcased a project that would be developing a highly secure storage system for cryptocurrencies.
The ICO was opened in January and the project attracted investors over the course of several weeks after. Investors have claimed to invest cryptocurrencies close to $10,000 in value, and this is just a single investor.
By the beginning of February, Giza held $2.4 million worth of ether coins. At present, these coins are missing.
The money from Giza was exhausted in just two weeks and the cryptocurrency was sent to several wallets in the system.