How Dfinity created one of the biggest Crypto scams of all time?
The “Internet Computer” project was started by the Dfinity Foundation, a Swiss, not-for-profit organization founded by Dominic Williams. The goal of the Internet Computer is to decentralize the internet by creating an alternate open-source web infrastructure.
The Dfinity foundation publicly launched ICP, the native cryptocurrency for the Internet Computer, in May. The project created mass hype with its team of all-star developers and researchers, including backers like Polychain, Andreessen Horowitz, and Coinbase. In no time, the project was listed on several major crypto exchanges, including Coinbase and Binance.
After its public launch on May 10, 2021, the token quickly gained momentum. It was the third-largest cryptocurrency by market cap, following closely behind Bitcoin and Ethereum.
The community’s enthusiasm soon evaporated as the token lost 95% of its value in weeks, resulting in countless retail investors losing their investments in the lightning-fast price decline.
The massive drop raised a great deal of suspicion among industry experts, the community, Dfinity supporters, and news outlets alike.
So what happened?
The launch of ICP was very opaque. The ambitious token lacked the decentralized promises echoed for years by Dfinity foundation. Dfinity Foundation, ignorant of their community and investors, barred token holders from accessing their tokens.
Independent research conducted by Arkham Intelligence, a crypto analytics firm based in New York, suggests that the price drop was not even a coincidence. The launch of ICP was a case of misconduct by insiders and those who seem closely connected to ICP and Dfinity Foundation.
Lack of Transparency in Token Allocation
Before the public launch of the ICP token, Dfinity conducted several public and private sales for small retail investors and large VC firms, raising somewhere between 120 and 160 million dollars.
According to their launch video, at the time of launch, there were 469,213,710 ICP tokens but no clear breakdown of token allocation amongst the token holders. The launch video also mentioned a 24-month “dissolve delay” in claiming the token but no information on accessing these tokens.
Moreover, in an article published on Medium, the foundation said that there would be a vesting period for early token holders. Days after the launch of ICP, the founder, in a tweet, revealed that the vesting period was only for some investors. Dfinity Foundation and its affiliates, who had almost 50% of the total supply, were not subjected to the same vesting period.
These actions by Dfinity Foundation show an evident lack of transparency in their structure.
Hints of insider trading and rug pulling
According to the Arkham report, Dfinity had quietly allowed the treasury and insiders to send 18.9 million ICP to exchanges. At the same time, they were making it extremely difficult for their long-time supporters to access their share of tokens.
The report also mentioned that it found 44 probable insider addresses that deposited 10 million ICP tokens worth over $2 billion at the time to exchanges, which coincided with the significant drop in the value of ICP tokens.
In response, the Dfinity foundation termed the Arkham report baseless without proving that there were no wrongdoings from their side. Michael Lee, a Dfinity Foundation spokesperson, said that the company was taking the “high road” and focusing on developing its Internet Computer project rather than focus on rumors by potential saboteurs.
A class-action lawsuit has been filed against the Dfinity Foundation in California regarding their lack of transparency over the Genesis ICP token allocation. Leaving their long-time supporters and small investors out of the loop while insiders reaped massive profits.
So, What’s next?
After the recent events and the actions of the Dfinity Foundation, they have completely and utterly lost their credibility as an organization. Their investors had high hopes that they’d provide a complete, decentralized ecosystem and were sorely disappointed.
To address the Dfinity foundation’s wrong-doings, we are creating ICP Reboot, a truly decentralized, autonomous organization where everyone can contribute. ICPR is a community-driven project whose founding members were once members of the Dfinity community and believed in creating a truly decentralized internet.
With ICPR, we are committed to creating a community-driven governance environment where every member can participate. The ICPR project is forking the original Internet Computer Protocol. We are starting a discussion among our community members on distributing tokens and bringing justice to the ICP community fairly. You can check more details on our website https://icpr.io/.
ICPR is committed to creating a community-driven governance environment in which all members can participate.
Like many, we invested in ICP because we believed in a free and decentralized internet. The greed and malpractice of Dominic Williams and the dfinity team have turned the ICP project’s significant promise into a huge disappointment. The future of ICP now lies in the hands of supporters.
We invite everyone who was once part of the ICP community and was cheated by the Dfinity Foundation to join us on our journey to provide the ICP community with what they truly deserve.
Social Links
https://bitcointalk.org/index.php?topic=5350958.0
https://github.com/icpreboot/contracts
