Safe ICO With ADN: Secure Crowdfunding Structures
Safe ICOs are one of the solutions to creating a more secure crypto world. In this ADN blog, we discuss fraud and other issues that need to be addressed.
The crypto community has become more mature a decade since Bitcoin was introduced to the world. From a mere dream of creating a currency that will eliminate the risk of double-spending, we are now seeing many use cases for the chief cryptocurrency. We also see blockchain technology being used by a plethora of industries.
Nevertheless, there are still some who commit acts that taint the reputation of crypto. Despite the solutions that the crypto industry has introduced to the world, many remain hesitant toward the innovation. Others express their animosity, throwing the same old arguments and focus on money laundering, terrorist financing, hacks, and scams. That is why we at ADN have made it our professional mission to minimize the occurrence of such misdeeds.
Crypto Escrow Turned Fraud Machine
In July 2019, the US Department of Justice charged Jon Barry Thompson with fraud, as two victim companies said that Thompson had taken funds amounting to $7 million. He promised to purchase bitcoins on behalf of the companies. However, the companies neither received the said cryptocurrencies nor got their money back.
Thompson is the Principal of Volantis, a global escrow and trade facilitation platform that focuses on providing bitcoin escrow services. According to an article by Forbes, the complaint was filed by Symphony, an Irish investment company that trades cryptocurrencies. The company sent Thompson €3,600,000 (about $4 million) to purchase bitcoins on its behalf.
When Symphony didn’t receive any of the promised cryptocurrency, nor got their money back, they filed a complaint at a Pennsylvanian court. The two parties agreed to settle privately. Unfortunately, Thompson failed to deliver according to the first settlement, thereby breaching the agreement that the two parties had.
This prompted Symphony to file a 27-page criminal complaint in a federal court in Manhattan. Now, Thompson is detained and is going to be prosecuted in the Southern District of New York in the succeeding months. Based on the report, he used phrases and terms which the clients did not understand, thereby preying on their ignorance of Bitcoin.
From Financial Commentator to Ponzi Schemer
Yet this isn’t the only crypto fraud complaint that was filed last month. An article by CoinTelegraph last July 16 revealed that 7 Venezuelan nationals filed a lawsuit with a Florida federal court regarding an alleged Ponzi scheme. Specifically, the scheme involved $30 million worth of cryptocurrencies and was conducted by the Eagle Financial Diamond Group Inc. and Argyle Coin.
What is worse, this scheme was promoted by Harold Siegel, a Canadian investment radio host who had built his reputation for decades as a financial commentator. A legal representative of Siegel maintained that they had nothing to do with the said scheme. According to complainants, Siegel’s company promised 100% interest, which many have yet to see being reflected on their bank accounts.
Did you know?
A Ponzi scheme is a type of fraud wherein investors of a certain project are promised high rewards with very little risk. This scheme was tied to Italian swindler Charles Ponzi, who ran an expansive investment scheme by paying returns to investors — whom he conned into giving him millions of dollars — from the pockets of incoming investors.
A Better Solution for Our Current Financial Woes
When the individual (or group of persons) Satoshi Nakamoto created Bitcoin, he did so with the intention of providing a better solution for our current financial woes. Nevertheless, many crimes have been accomplished with cryptocurrency.
Not that cryptocurrency is bad in itself; all too often, it’s the one who uses a particular innovation or platform who ultimately dictates its morality.
On the other hand, more frauds and similar misdeeds have been accomplished through fiat money. In fact, the amount of fraud and other criminal activities associated with cryptocurrencies is nothing but a molehill compared to the number of crimes accomplished with fiat.
Yet many of us express lesser misgivings when talking about trust in banks and other fiat institutions. Nakamoto said that the chief problem with conventional currency is the sheer amount of trust that it requires for it to work.
”The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust,” Nakamoto wrote. “Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.”
Truth be told, both currencies have a fair share of history of fraud and other criminal activities that became possible due to the nature of their systems. Nevertheless, we are witnessing more and more people joining the ranks of crypto believers who have had enough of the same old fiat fiasco.
ADN: The System for ICO Security
It is in the acknowledgment of these issues that we have created ADN. We are fully aware that ICOs have been called unpleasant names by many who have become victims of fraudsters and scammers. Nevertheless, we still believe in its potential to allow every average investor to have their share in fueling projects that have good disruptive potential.
Along with many other factors, the above-mentioned frauds occurred because too many people placed too much trust in people, not in systems. As mentioned above, Thompson’s complainants were tricked because they didn’t have adequate knowledge of cryptocurrency and blockchain technology. On the other hand, Siegel was able to lure many into his scheme because many of them were blinded by staggering rewards. These fraudsters smooth-talked their way into extorting money from unsuspecting victims, inadvertently damaging the reputation of ICOs and cryptocurrencies in general.
Now that we have developed systems that offer solutions to problems which many fiat institutions and governments could not, we need to exhibit less trust in people and more trust in systems and institutions — that have proven their reputation beyond any shadow of a doubt — to ensure that we will not make the same mistakes as our predecessors.
Many popular blockchains are open-sourced, thereby allowing all nodes of a particular ecosystem to verify transactions and check errors and possible security breaches by themselves. In the same vein, we are creating our ICO Wallet to allow all investors to scrutinize the legitimacy of the ICO projects that they have invested in. If they believe that a specific ICO does not deliver according to its promise, they can reject the continuance of the ICO and receive their rightful refund. Otherwise, if a majority of the investors have given their green light, the project continues with its development.
By and large, many crypto frauds occur because we do not have adequate protective systems at the moment. Crypto investors and enthusiasts can, on their end, protect themselves by cross-checking the legitimacy of any platform that offers easy commissions and rewards. On our end, we promise to develop a system that will protect the hard-earned money of investors who will participate in ICOs held on our platform. We will remain transparent with the location of their investment through our ICO Wallet, and empower them to demand only top-quality blockchain projects from ICO companies.
Stay tuned to know more about our projects and developments. Like, follow, and subscribe to our official social media channels.
