An open-minded report about how EncryptoTel ICO development team and escrows scammed their investors
To summarize this report, I could say that it is all about how EncryptoTel team violated ICO terms and conditions, constantly lied to ICO investors, how funds was stolen by weirdly suspicious hack and as some of investors didn’t even get their tokens.
First of all, I am sorry for my English (as it is not my native language) but with my deepest respect to all honest EncryptoTel ICO investors the factual truth must be told so I will try to outline this report with every detail and key element to truly show the whole picture here. If you are interested to look up this gathered information yourself in more specific details then you are welcome to visit and inspect/investigate official ICO site and most active community sites to make sure that no intentional lies are told here (most active of all slack channel requires registration with auto invite):
https://bitcointalk.org/index.php?topic=1848180.0
https://medium.com/@encryptotel
Now I will introduce you with step-by-step factual information (with sources to check facts) to clearly show how unfair, unprofessional and fraudulent EncryptoTel team members and ICO escrows were in process of conducting this ICO.
— -1st STEP — — Violating ICO Terms and Conditions (Crowd sale)
Information from official EncryptoTel ICO site Terms and Conditions (Source — http://ico.encryptotel.com/assets/pdf/EncryptoTel_TC.pdf )
“TIMING OF SALE
The initial sale will begin at 00:00:00 UTC on 24 April, 2017. The sale will run for 37 days and will end at 23:59:59
UTC on 31 May, 2017, or whenever the cap of $3 milli
on has been reached.”
Additionally — Official EncryptoTel ICO statement (from https://bitcointalk.org/index.php?topic=1848180.0 )
“EncryptoTel aims to raise a minimum of $100,000, which will enable completion and release of the core product (already in working beta). $250,000 will enable broader functionality and greater degree of publicity. A $1–3 million raise would allow aggressive entry of into the telecommunications market and the acquisition of licences to allocate phone numbers directly to customers. The ICO will be capped at $3 million.”
1st FACT — EncryptoTel ICO crowd sale raised $4,429,211.94 (approx. $4.4 million) and to doing so clearly and strongly violated their own Terms and Conditions (Source — http://ico.encryptotel.com/ )
2nd FACT- In May 10th, 2017 after $3 million cap was reached the following official announcement was posted from EncryptoTel team (Source — https://medium.com/@encryptotel/encryptotel-crowdsale-ends-with-the-collection-of-3-million-e17a6bf4444b ).
“The cryptocurrency markets are extremely volatile at the moment, with BTC, WAVES, ETH and ETC experiencing significant movements in price. Due to this factor, it’s likely that the dollar equivalent of the funds collected will fluctuate above and below the $3m mark. We also understand that display issues have prevented some investors from making deposits. In recognition of these factors, will will be leaving the crowdsale open for a final 24 hours, before closing it for good. We consider this the fairest way of ensuring investors all get a chance to commit funds, without unduly diluting our market cap.”
This was one side decision from EncryptoTel team and escrows — no investors opinion or common decision were taken into account by creating public poll (for example) or any other democratic way.
3rd FACT — ICO crowd sale officially ended in In May 11th, 2017. In these additional hours approx. $1.4 million additional funds were raised above $3 million determined crowd sale cap limit (about 50% more than determined cap). And what makes this sudden ICO prolonging more suspicious that for most part funds in this additional time came from 1 time huge approx. 1 million WAVES token investment form 1 specific investor. In spite of very significant objections and dissatisfaction from many investors for reasons mentioned above (Source — https://bitcointalk.org/index.php?topic=1848180.1980 ) EncryptoTel team and escrows decided independently to keep these additional funds just like that and the following official announcement was posted (Source — https://medium.com/@encryptotel/an-update-on-the-encryptotel-crowdsale-e2c3739f2b4c )
“As an escrow for Waves, I can assure EncryptoTel investors that the additional funds raised after the ICO cut-off time will be used in an appropriate way by EncryptoTel team. The decision to prolong the ICO for 24 hours was quite reasonable, since the investment target was reached through an appreciation in the exchange rates, and many investors were unprepared for such an abrupt end to the crowdsale.’ — Sasha Ivanov, CEO of Waves and escrow for EncryptoTel”
This was one side decision from EncryptoTel team and escrows — no investors opinion or common decision were taken into account by creating public poll (for example) or any other democratic way.
I personally strongly agree with many investors logical conclusion that in this way early investors expected ETT token market value (after ICO) will be significantly lower because of reason that about 50% more total tokens will be distributed in the market.
4th FACT — After some serious and intensive continuing complains and objections in public community sites and overall dissatisfaction from investors another announcement was posted (Source — https://medium.com/@encryptotel/encryptotel-crowdsale-update-3-a48b495a8de0 )
“We have come to a solution that we believe will be mutually acceptable for all parties: buying back and burning a proportion of ETT using the additional funds collected.
It is not yet clear how many investors will choose to sell their tokens in this way. Initially, we propose to place a buywall of 200,000 WAVES for ETT, using the Waves DEX.”
Again, this was mostly one side decision from EncryptoTel team and escrows — some of investors agreed, most suggested to refund investments to investors who invested after $3 million cap or refund to all investors would be fair, there were also other opinions through community discussions, but again no common decision were taken into account by creating public poll (for example) or any other democratic way.
5th FACT — In 52 days passed from ICO ending and in all the ETT trading time in Waves DEX exchange and till this day there is still no ETT buywall (of 200,000 WAVES) for inicial ICO price 0.000047 BTC from EncryptoTel team placed. (For excuses please see — https://encryptotel.slack.com )
Sources for EncryptoTel team unfulfilled promises:
In May 15th, 2017 source — https://medium.com/@encryptotel/encryptotel-crowdsale-update-3-a48b495a8de0
“We have come to a solution that we believe will be mutually acceptable for all parties: buying back and burning a proportion of ETT using the additional funds collected.
It is not yet clear how many investors will choose to sell their tokens in this way. Initially, we propose to place a buywall of 200,000 WAVES for ETT, using the Waves DEX.”
In June 8th, 2017 source — https://medium.com/@encryptotel/encryptotel-distribution-in-progress-42f46b4c3ca4
“As agreed after we experienced a last-minute surge in funding, we will be setting a buywall using 200,000 of the additional WAVES we received, with a current market value of over $1 million. The average ICO price of ETT was 0.000047 BTC, so we plan to use a bot to set the buywall and dynamically adjust prices in WAVES. This will take place on Waves’ DEX, where tokens can be traded directly against WAVES, along with the other benefits that come with a decentralised exchange. (Because we will need to code the bot, this buywall will not be set for up to two weeks.)”
— -2nd STEP — — Violating official ICO statement (Distribution timeframe)
Information from Official EncryptoTel ICO statement (from https://bitcointalk.org/index.php?topic=1848180.0 )
“EncryptoTel will conduct a through audit of deposits before tokens are created and distributed at the end of the crowdsale. This process may take up to two weeks. Upon distribution, tokens can be transferred using the Waves wallet and traded on any supporting exchanges.”
1st FACT — In 52 days passed from ICO ending and token distribution to investors are still not finished yet. There are still many complains from investors (including me) who have done everything according to EncryptoTel token withdraw instructions and contacted with EncryptoTel support but still haven’t received their tokens (For investor complains and dev team excuses please see — https://encryptotel.slack.com )
There were several posts and announcements from EncryptoTel team that distribution will be finished soon but were never fulfilled and distribution issue is still ongoing.
According to latest EncryptoTel team member information (Source — https://encryptotel.slack.com ) distribution is ongoing issue and set deadline by EncryptoTel team is end of July, 2017. It would be 81 days from ICO ending date, of course assuming that this deadline will be respected and fulfilled.
2nd FACT — Despite the fact that distribution is not finished and many investors still don’t have their tokens received escrows (CEO and founder of Waves platform Sasha Ivanov and Dmitry Meshkov) have already released ICO funds to EncryptoTel team according to this official media post — https://medium.com/@encryptotel/encryptotel-distribution-in-progress-42f46b4c3ca4
“The good news is that the start of distribution unlocks our escrow balances, meaning that we now have the resources to start moving forward with the new phase of EncryptoTel’s existence. We are hiring new people and setting up our offices, and in due course we will register a company as a legal entity and carry out the other tasks that will make us a real-world business.”
This is obviously very unfair move from escrows in relation with investors.
3rd FACT — From beginning there was and still is ongoing issue with viewing token balances in ICO control panel how many ETT tokens will be distributed to investor according to their investment amount, despite many complains and confusion from investors this wasn’t fixed after security audit and still isn’t till this day (Source — https://encryptotel.slack.com ).
There were several posts and announcements from EncryptoTel team that they are working closely with Incent platform (which was used in ICO) team to fix this issue but still no positive results (in many cases) till this day.
Source or EncryptoTel team unfulfilled promise (May 24th, 2017) — https://medium.com/@encryptotel/token-balances-fixed-54e59fbf7b50
“Investors will be aware that the ICO portal used for the EncryptoTel crowdsale has been affected by display issues, which have meant that it has not always been possible to know how many tokens you own. These have now been addressed, and final ETT balances should now be displayed correctly.
Please log in to your ICO area to view your balance. (It may take a few minutes to update, because the portal needs to connect to nodes for all four blockchains — Ethereum, Ethereum Classic, Waves and Bitcoin.)
If there is still an issue with your balance, please fill in the form to let us know and we will take a look as soon as possible.”
4th FACT — No promised bounties till this day have been distributed for people who promoted this project according to EncryptoTel bounty campaign (Source — https://encryptotel.slack.com and https://bitcointalk.org/index.php?topic=1848180.220 )
Also, it is worth mentioning that no additional Incent token bonus from investment amount was distributed yet. This is eligible to all investors for ICOs conducted on Incent platform, according to this official Incent source — https://www.incentloyalty.com/icotech_request
— -3rd STEP — — Not acting in investors best interests (Suspicious hack with “stolen” ICO funds with no proper explanation or investigation from EncryptoTel development team)
1st FACT — All trading was stopped in June 22nd, 2017 according to this official post that there were some suspicious transactions (Source — https://medium.com/@encryptotel/an-important-update-1e97f5268a0a )
“We’re looking into a some suspicious transactions on the ETT token. Please do not transact or trade our token while we investigate. We have suspended our blockswap while we gather further information.”
In the following post next day this announcement was stated (Source — https://medium.com/@encryptotel/an-important-update-2-fd541726fb47 )
“Yesterday, late in the evening Moscow time, our BlockSwap service was attacked and ultimately hacked. The amount of losses is a staggering 38.5 million ETT tokens from the Ethereum chain and a further 3.8 million ETT Waves tokens.”
2nd FACT — “Investigation” was conducted and here is official announcement from EncryptoTel team (Saurce June 27th, 2017 — https://medium.com/@encryptotel/an-important-update-4-9c1deb80001b )
“Our investigation has come to a conclusion. We are 100% certain the fault lies with Incent.
We have enclosed the report of our colleagues from the laboratory of Zerion, who helped to conduct the investigation. We expect Incent to publicly apologize to the EncryptoTel community, and accept full responsibility including financial damages.
Here is the report on the investigation into the hacking incident: https://drive.google.com/file/d/0B8k5x6THP0p7dFNSV2s4YmI4OVk/view “
What makes this “hack” more suspicious is that according to information from this same source stolen ETH ETT tokens were returned by obviously honest hacker:
“The hacker has returned the 38 million stolen ETH ETT tokens, likely as a result of our statement of intent to re-issue the ETH ETT token. All tokens are now accounted for and secure as you can see here. Trading will be re-enabled on Tidex soon.”
In the matter of fact these stolen and returned tokens will stay as is and no new token redistribution will be issued.
And there is more — No actual server logs were provided, that actually proves that this hack really happened the way EncryptoTel developers are describing it. On the other hand Incent (platform on what ICO was conducted) team member posted Incent official statement on this matter with related Incent side server logs that proves that no one accessed the mentioned vulnerability at the time of hack happening (Source — https://medium.com/@incentloyalty/an-update-on-encryptotel-3b06adf4c9b9 )
“The post is inaccurate. It states ‘ We are 100% certain the fault lies with Incent.’ They appear to be certain because of the existence of the vulnerability, as detailed. The https://drive.google.com/file/d/0B2xcYgYMGKI0X3pUUDUtMS0tRGM/view indicate that the vulnerability was only accessed on the 25th June, after the hack.”
As till today no further and more specific information is provided by EncrytoTel team to clear thing out with this suspicious hack in process of which more than 200 BTC were stolen from invested funds in total, and not even mentioning how bad this uncleared and shady situation will affect market value of the ETT tokens and reputation of whole project. There are no doubts that token holders/investors will suffer significant losses from these actions.
Conclusion
Firstly — this report is a call out for future investors in ETT blockchain token asset and EncryptoTel business partners (especially cryptocurrency exchanges) please take in notice this report and decide for yourselves are these people really the honest ones and is it worth taking a risk in collaborating and cooperating with them?
EncryptoTel team members and escrows (for more info please see — http://ico.encryptotel.com/ )
Roman Nekrasov CEO and co-founder
Aleksey Kuznetsov CTO and co-founder
Igor Bityutskih CIO and co-founder
Sasha Ivanov CEO and Founder of Waves Platform, Bitcoin multisig & WAVES balance escrow
Dmitry Meshkov PhD, IOHK.io researcher, ETH & ETC balance escrow
Please notice that this report will be sent to all largest cryptocurrency exchanges and cryptocurrency news portals for consideration.
Secondly — this report is a call out for EncryptoTel team and escrows to reasonably explain (no empty excuses) their actions mentioned in this report and at last act fairly and be respectful to investors by conducting a public democratic poll on refunding investments back to investors. Let the investors decide do they want to continue participate in this failed project or not. These are the rights of investors in case of brutal violation of ICO Terms and Conditions, aren’t they?!
Thirdly — this report is a call out for all investors who participated in this EncryptoTel ICO, please leave your comments below this report and ask escrows and development team members (here in comments and in all available community sites) to conduct public pool for investors to decide on refund. And please feel free to refer to this report anytime. I know that many of you were fully informed on all what was happening during this ICO as you were following closely the development of these events and many of you just like me are also interested in refund. Together we could at least try to turn this situation around.
And one more thing, I would like to point you in direction of alternative opinion about this project technical specifications, technologies behind it and potential of this project, please read with open mind and make you own conclusions — “CRYPVISER vs ENCRYPTOTEL ? NO WAY! NOTHING TO COMPARE!” https://medium.com/@vadiman/crypviser-vs-encryptotel-no-way-nothing-to-compare-76e78a0a6ec
John Seagul & Anonymous group of worried investors