ICO Scammers Make Off with Over $2 Million of Investors’ Money

ICO Scammers Make Off With Over $2 Million of Investors’ Money

ICOs have garnered plenty of attention over the years due to their largely unregulated activities, and following a recent event involving an ICO project with Giza, more unwanted attention is likely to follow. Scammers recently made off with over $2 million USD in cryptocurrency through the startup’s ICO, leaving several investors in the lurch.

Also see: A. Antonopoulos Calls Out ‘Lies,’ Says He Never Attacked Bitcoin Cash

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ICOs: Common, but Fishy

ICOs occur around the world, and for the most part, they’ve been an effective way for some to raise money for new projects. In 2017, the total amount raised amongst global ICO projects neared $4 billion, while in 2018, the number already nears $3 billion.

There’s lots of cash at stake, which is what makes ICOs also risky. Investors offer cryptocurrency like bitcoin and ether in exchange for new coins or tokens offered by a startup. Their investments are largely unprotected by legal processes, and a growing number of ICO-related scams appear to be capitalizing on that aspect.

CNBC reported that the latest example occurred when scammers created a fake LinkedIn profile and copied pictures from another user’s Instagram account to create a phony profile. Over 1,000 investors showed initial interest, and all seemed well until a falling out occurred with Giza’s sole supplier – a Russian company called Third Pin that reportedly makes security devices.

Hidden in the Shadows

In addition, a “mysterious individual” by the name of Marco Fike appears to be at the center of the potential scam. Giza claimed to be developing a “super-secure device” that would grant users the option of storing crypto — and as the elusive COO, Fike is the subject of wide speculation as several partners, former employees and ICO investors claim they’ve “never seen Marco’s face.”

Fike claims to have gone to the University of Oxford per his LinkedIn page, yet doesn’t specify which college. He also lists employers like Microsoft, but the company denies that Fike has ever worked with them.

At the project’s start, the ICO held a reported $2.4 million in ether coins alone, but now all but $16 worth of that money is missing, and Giza’s website has vanished. An anonymous investor explained:

“Everything was fine until that company that was meant to develop their device came out on the Internet and said that Giza has cut ties, and it seems to be a scam and they might not be developing anything.”

What Will ICO Investors Do?

Third Pin’s Chief Executive Ivan Larionov said he first felt the project was fraudulent when his company was given no technical requirements on a design he received in December last year for a security device that Giza wanted.

Larionov says he was asked to set up operations outside Russia, which made him more suspicious. When Giza refused to make installed payments when costs went up, Third Pin decided to cut its contract.

Many investors have been unable to get their money back, and have contacted law enforcement in the U.K. for assistance.

Cal Evans – previously listed on Giza’s site as its legal advisor – runs a cryptocurrency strategy and compliance firm known as Gresham International. He said investors began contacting him about a month ago – around the same time Gresham decided to end its relationship with Giza.

“We are going to do whatever we can to catch these guys,” he said.

Will ICO scams mean more regulatory scrutiny for legitimate projects? Post your comments below.


Images via Pixabay

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