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What's more harmful - a scam or incompetence?

What's more harmful - a scam or incompetence?

The story of the embattled project Confido took another odd turn with the reemergence of the previously taken down website, amended to display the following message from a Dutch law firm:

The statement, which was confirmed as legitimate by the law firm in question, leaves open many questions. What is the timeline for refunds? Is it just investors in the ICO (who, such as myself, all should have made a profit anyway) being refunded? If it wasn't a scam, why did Joost Van Doorn, the CEO, create a fake LinkedIn page and lie about his employment history? Why were the website and their entire online presence dismantled? The claims of death threats, whilst certainly believable, are not by themselves an explanation for what had all the hallmarks of an exit scam.

My suspicion is that this refund is an attempt to ward off legal action and the team have made out handsomely after 'buying in' in the presale, before subsequently dumping their tokens and closing the project down. 

If true and carried out however, with a refund not simply enacted to avoid or mitigate a potential securities fraud case, it begs the question of how the team did not realise sooner the project was not feasible on such a minimal raise. A team raising $375,000 who were unable to come to the basic conclusion that they could not actually produce the product they were raising for would perfectly encapsulate a nonsensical market, lending weight to critic's arguments that investors are in the midst of a mania and that there should be greater regulation around ICO's and the crypto market in general. 

It is not often that a scam is the lesser of two evils but in this instance it might be. People understand the common motivation of greed, and many are imbued with a sense of confidence they can spot what is a scam and what is not. Plain incompetence, however, undermines confidence, tainting valid projects.

The only people who could be potentially hoping that it was not not a scam are TokenLot, the ICO facilitators. Whilst it is up to investors to perform their own due diligence, they might rightly have expected that some of the basic checks (are the people real and who they say they are being the foremost) would be conducted by the site. Eli Lewitt, the co-founder of the site, told Motherboard that the team were "were very good scammers".

 

The weakest link

The weakest link

Taking advantage of the market overreacting

Taking advantage of the market overreacting