AFM: ICO is "Dangerous cocktail"

Netherlands Financial Markets Authority AFM reported on high risks associated with ICO
14 November 2017   2097

Dutch financial regulator warned investors on high risks of initial coin offering campaigns.

The Netherlands Authority for Financial Markets (AFM) – the country's equivalent to the U.S. Securities and Exchange Commission –released a statement today outlining the risks it sees in the market for new cryptocurrencies, including those issued through the crowdsale model.

Although the AFM sees the possibilities of blockchain technology for financial services, it points to the high risks of ICOs in the current hype. The high risk of scams and loss of intake combined with the hype around ICOs at the moment is a dangerous cocktail.
 

Merel van Vroonhoven

Chairman, AFM

Also, the AFM listed main ICO risks:

  • The anonymous and transboundary nature of blockchain technology makes it possible to use an improved scheme of the traditional pyramid, which is difficult to recognize.
  • The promise of profitability is overstated, while ICO startups are projects at an early stage of development.
  • Private investors do not have enough experience and knowledge to assess the investment attractiveness.
  • ICO-projects do not provide exhaustive information for risk assessment.
  • Many projects have speculative features and are subject to manipulation.
  • They are an ideal way of laundering funds received illegally.

 

SEC to Accuse Veritaseum ICO of Fraud

SEC believes that project's tokensale, thru which it raised $14.8M back in 2017-2018 had a signs of scam and company misled the investors
14 August 2019   166

The U.S. Securities and Exchange Commission (SEC) has sued New Yorker  and Veritaseum-related companies that have been caught by the agency in conducting an unregistered ICO with signs of fraud. It is reported by Cointelegraph.

According to documents published on the network, the SEC intends to hold Reggie Middleton accountable and immediately freeze the assets of Veritaseum Inc. and Veritaseum LLC.

The Commission claims that the defendants raised about $ 14.8 million through an initial coin offering (ICO) in 2017 - early 2018. At the same time, many investors were misled, as the company distorted information about the conditions of the token sale and deliberately hid some significant details.

The American regulator claims that the project still has about $ 8 million of illegally raised funds. According to the SEC, these assets must be frozen immediately.

Amid this news, the Veritaseum (VERI) rate has fallen by 70%. Now the coin is trading near the $ 5 mark, although at the beginning of 2018 its rate was approaching $ 500.

Veritaseum was created as a financial p2p platform, involving the movement of capital without traditional intermediaries. Also, VERI was positioned as a utility token for use in consulting services and access to various research works.

In 2017, Veritaseum blockchain startup fell victim to hackers, having lost $ 8.4 million from ICO investors.