ICO Scams: Magos — A Case Study
The name ICO (Initial Coin Offering) is clearly modelled off the well-established term IPO (initial public offering). While both events have an offering of sorts, the similarities end there. IPOs are highly regulated affairs. Investment banks will do due diligence on a company aspiring to IPO. Investors will also do their due diligence. Public companies must comply with regulatory requirements to make their finances public. Investors participating in an IPO are sure to receive their shares.
The same cannot be said for an ICO. This new type of offering is completely unregulated, and when presented with an address to send digital currency to, every investor should be cautious. Due diligence for an ICO is very different than that for an IPO. There are no finances to review. There is usually very little information about the company online as most ICOs are for start-ups. Nevertheless, it is quite easy to determine the legitimacy of a project given the right approach.
Let me now to turn to an ICO that is 100% a scam: Magos
Magos purports to be “a complex forecasting model based on a system of neural networks. Each network performs a specific task, and their collaboration produces a forecast with a high degree of accuracy.” These forecasts would be used to predict the outcome of sporting events.
Exhibit 1: Whitepaper
Each ICO should have a whitepaper that explains the purpose of the project, and outlines how it will function. Magos has a whitepaper (they call it a bluepaper — not sure why?) on their website that is quite long and to be fair, does look like it was written with some thought. However there are a few red flags here:
1) The Token: The Magos token offers holders voting rights and dividends. Does this sound familiar? Well it should, because that is also what a share offers. Why is this being built on the blockchain? What conceivable purpose does the blockchain offer other than the path to easy money via an ICO?
2) The Test: On Page 26, the whitepaper describes the test that occurred on ‘Fansunite.com’. Naturally results were good. But why use this platform? The website looks pretty dodgy and does not seem to have that many users. Despite the footnote asserting otherwise, could there be a relationship between Magos and this website?
Scam Meter: 50% — There are two red flags in the whitepaper, but nothing that proves conclusively this is a scam.
Exhibit 2: The Community
Magos has a slack channel with 290 people. They also run a blog on Medium. They have a presence on bitcoin talk and telegram, Facebook and twitter presences.
The marketing efforts by Magos are similar to those of other ICOs. Really, there is nothing distinguishable about them.
Scam Meter: 0% — Magos has marketed this project in a similar way to legitimate ICOs.
Exhibit 3: The Location
It is not clear from Magos’ website where the project is located. Is it in Europe? Asia? Where? Do they even have an office? This is an immediate red flag for me.
I did an IP search for their domain and it appears that it is hosted out of the Netherlands. But — this doesn’t get closer to discovering where the project is based.
In the Slack channel, the user called ‘Alessandra Taylor’ mentioned that Magos was based in Switzerland. However there is no concrete evidence to support this assertion.
Scam Meter: 60% — Just because there is no location mentioned on the website, or evidence that the location is in Switzerland does not necessarily mean this is a con. It is possible Magos does not yet have an office set up. However, I still think it unlikely that a project purportedly running for two years would not have an office set up.
Exhibit 4: The People
The profiles of the people on the website (e.g. Ante Magnussen) do not turn up any results from Linkedin. Nor do their profiles provide any information about which companies they worked for. The only real life organization mentioned is in the profile of Andreas Theiss. It says he has a masters degree from Northwestern University in Predictive Analytics. This program does actually exist but there is no evidence that someone called ‘Andres Theiss’ attended. Based on the factors above, I’m not convinced these are real people.
There are two users called ‘allessandra_t’ and ‘andreas_theiss’ in the Slack channel that respond to questions, which is a good sign. Nevertheless, there is not really enough activity on the channel to conclude these people are actually who they say they are.
Scam Meter: 100% — This is the smoking gun. A quick linked in search does not find ANY of the people associated with the project. Nor do they have any companies associated with them in their linkedin profiles.
Conclusion
Based on the four factors I outlined above, I am convinced Magos is a scam. While the whitepaper is coherent, and the there has been an OK marketing campaign, there are serious issues with the people behind the project and its location. These problems are enough for me to deem the project a scam.
I would urge all investors to give Magos a miss. There are plenty of other high quality ICOs to invest in during this time — so stay FAR away from Magos.