Perhaps the name was a hint. A cryptocurrency startup scrubbed the internet of its website and social media accounts after raising $375,000 through an initial coin offering. Confido, which claimed to be developing a smart contract-based cryptocurrency payment platform for online shoppers, held the ICO from November 6 to 8. But on Sunday, Nov. 19, Confido removed its website, took down its whitepaper, and deleted its Facebook and Twitter accounts, The Next Web first reported.
Confide may be a just con, and another in a series of ICO ripoffs associated with cryptocurrency. Suspicions were first raised by amateur sleuths on a cryptocurrency forum on Reddit, who wrote that Confido’s founding team appeared to be fake people with dubious profiles.
On a cached version of Confido’s website, the CEO of Confido, someone who goes by Joost van Doorn, claimed to have a master’s degree in international business and said he worked at eBay and PepsiCo. But his accounts on Facebook and LinkedIn, along with his co-founders’ profiles, have also been deleted.
After word circulated that Confido’s ICO was a scam, the value of the company’s digital token dropped from $1.20 per coin to around two cents, according to data from Coinmarketcap.com. (Investors bought Confido’s tokens with ether, the second-most popular cryptocurrency after bitcoin.)
On a Confido forum on Reddit, a user who claimed to be van Doorn explained in a post that the company is having major legal issues. “We are in a tight spot, as we are having legal trouble caused by a contract we signed. 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,” van Doorn wrote– although the statement was posted by the handle Chris-ConfidoSupport.
In another post on Monday with the same handle, Chris-ConfidoSupport, the user wrote that he is a representative of Confido and has “absolutely no idea what has happened.” He said he would find out what happened and added that this is “completely out of character” for van Doorn.
TokenLot, a company that Confido hired to host its initsal coin offering, says in a statement on Medium that it is trying to figure out the identities of van Doorn and the Confido team.
“We have reviewed all previous emails and conversations to try and find any clues that might lead us to the actual people behind this scam. Fortunately, we have stumbled across one very positive lead,” TokenLot’s statement read.
TokenLot also said it filed a report with the Federal Bureau of Investigation.
Initial Coin Offerings are popular, but unregulated fundraising tools. That’s a formula for scammers looking to make money. Peter Van Valkenburgh, the director of research at Coin Center, a bitcoin and cryptocurrency nonprofit, said in an earlier interview that investors need to scrutinize each company hosting an ICO. Hundreds of companies have raised over $3.2 billion through Initial Coin Offerings this year, according to CoinSchedule.com, which tracks ICOs. But, the majority of campaigns offer little for investors besides the distant promise of explosive profits.
In July, the Securities and Exchange Commission warned investors about “improper” ICO schemes and issued rules on how startups can decide whether or not they are selling securities or utility tokens. In November, the SEC warned that companies are using celebrities to endorse dodgy-sounding ICOs.
Earlier this year, a startup called Tezos held an ICO and raised $232 million on the premise that it will make software to improve blockchain technology. But after management in-fighting, investors cannot re-sell their tokens until the company resolves its issue. Two class action lawsuits have been levied against the company.