Confido — the latest cryptocurrency scam?

Confido, one of the most hyped blockchain projects of the last month, announced they were facing legal trouble before vanishing off the face of the earth. Is this the latest scam in the crypto world?

The concept behind Confido was to allow a smart contract to monitor the delivery of a package. Once delivered, the smart contract would release funds held in escrow to the seller. If the package was never delivered, the funds were released back to the buyer. Holders of the Confido tokens would get a share of the 0.7% escrow fee that Confido would charge.

Confido’s ICO came as a breath of fresh air to the crypto community thanks to their low hard cap and small bonus offering to pre-sale investors. Unlike many ICOs that ask for literally millions of dollars worth of ETH, Confido wanted to raise just $400,000.

Confido acknowledged their low hard cap on their website:

We think the current ICO space is messed up; companies are raising millions without a fully working product or existing customers. We have talked with financial analysts and we simply don’t need more than $400,000 to develop and market our project. ICO’s are a great opportunity to get funding for a project, but we don’t want to abuse this opportunity.

This decision was generally applauded by the crypto community. For too long ICOs have been about grabbing as much money as possible, with some ICOs being uncapped. This refreshing take on the ICO process provided confidence that maybe this should be the way forward for all ICOs.

The final stage of the ICO sold out within minutes, with a 2 ETH cap per person. Taking the total raised to 1,235 ETH ($374,477) for 9,000,000 tokens.

Within 24 hours of the ICO closing, the tokens were available to trade on EtherDelta. Fuelled by the hype around the ICO, and low token supply, Confido flew from an ICO price of $0.042 to a high of $1.20 within a couple of weeks.

Confido appeared to be actively working towards launching. They released a statement saying they were going to be working with Kleros to solve disputes, and that ChainLink would be utilised from the beta onward, with Oracalize being used in their alpha product. At this point, there was little concern over the legitimacy of the project. To build even further trust, Confido announced that they would be locking up their tokens indefinitely.

On November 18th, the price crashed from around $0.88 to $0.48 before recovering to around $0.67. This didn’t raise any suspicions at the time but it is now speculated that this was the founders, and their close contacts, selling off.

On November 19th, Confido posted an open letter to the community on Medium. The post has since been deleted, but it read:

To our community,
Thanks for always standing by us. We have achieved some incredible things these last two weeks, and the crypto space is beginning to notice us. However, we owe you an apology. Right now, 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.
We are trying our best to fight our way through this. As it currently stands, development has been delayed until a resolution is found. We are honestly not sure how long we will be delayed by, but we’re trying our best to get this behind us as fast as possible.
It is likely that we will be able to find a solution to rectify the situation. However, we cannot assure you with 100% certainty that we will get through this.
This announcement will shock a lot of people, and that’s understandable. I, Joost van Doorn, want to personally apologise for any financial damages this announcement will cause to people. It was never our intention to hurt investors; we didn’t see this coming.
We will keep you guys updated. Please join our announcement channel at https://t.me/joinchat/AAAAAENHpUJSHK7jzX6GZg
Regards,
The Confido team.

Despite initially reassuring investors on the Confido subreddit, the team behind Confido have erased their existence by:

Chris, the support team member, who posted frequently on the Telegram and subreddit issued an official announcement on the /r/Cryptocurrency subreddit. It reveals that even he has been kept in the dark.

Look I have absolutely no idea what has happened here. The removal of all of our social media platforms and website has come as a complete surprise to me.

A few savvy investors on 4chan picked up on small red flags that most, without the benefit of hindsight, failed to see. If nothing else, this should remind us all to be vigilant if we choose to invest and speculate on the crypto markets.

A token that was selling for $1.20 at it’s peak, is now trading at less than $0.07

All the evidence currently points towards Confido being the latest in a line of cryptocurrency scams. Every scam hurts the reputation of blockchain projects and slows the mainstream adoption of a technology that could change the world.

Update: 21st November

TokenLot, the platform that hosted Confido’s ICO, posted an update on the /r/Cryptocurrency subreddit. Their update revealed that the ETH collected was sent to a Bittrex account that was KYC registered. However, Bittrex require a law enforcement order to release customer information, and therefore TokenLot are in the process of filing a report with the FBI.

Despite this sounding promising, as other redditors pointed out — why did TokenLot not perform any KYC or identification checks? Many are speculating that it is likely that fake ID has been used for Bittrex and TokenLot (if they do require identification to be shown).

TokenLot have since deleted the post, but you can see it in the screenshot below, or by viewing /u/adambenayoun’s post in which they copied and pasted the original message before adding in their own commentary.

Chris, the above-mentioned support member, also posted an update on /r/cryptocurrency. He revealed that he had made an official statement to the police in his local area who may be undertaking further investigation. Having never actually met or seen Joost, the true identity of the person(s) behind Confido remains a mystery.

Chris also spoke with Kleros (the dispute resolution solution that Confido apparently planned to use). Kleros confirmed that did have communication with Joost through Slack, but, like Chris, never saw his face.

Update: 3rd December

The Confido website was updated on 24th November with a message from Jonkers Van Gemert lawyers that stated that Confido was never setup to be a scam.

The lawyers confirmed on their own website that the statement was issued by them.

On 1st December, a new notice was issued on the Confido website which seems to indicate that 880.1402 ETH will be refunded.

Refunding the money raised during the ICO will be little consolation for those who bought into Confido when it was trading around a dollar. In fact, returning the original ETH is giving more money back to those who are most likely to have benefited most from the quick rise in price, especially if they took profits early on.

However, if the refund goes ahead, I think it’s a positive sign for the crypto-space. Maybe this wasn’t a scam after all. Maybe it really was a panicked CEO, totally out of his depth, making some majorly bad calls at a time of crisis.

Time will tell.