PSA for ICO owners — more ways to protect your company
Paragon Coin shares the story of their struggle with scammers and slanderers
To run an ICO these days means, if all goes to plan, to publicly raise millions of dollars in a matter of days or weeks (or even minutes or seconds). Money at that kind of volume and speed is bound to attract the attention of people trying to dishonestly make a quick buck — in other words, scammers. ICOs, especially the legitimate ones raising the most money, are unfortunately too often targeted by DDoS and phishing attacks during their fundraising campaigns in an attempt to steal money from the ICO owners.
However what we hear less about is another kind of cyber scam — scammers targeting ICO owners via online bullying and extortion with the goal of either tricking or forcing the ICO owners to hand over their funds.
One of the ICOs recently targeted by this kind of elaborate scam was US-based Paragon, a new blockchain-powered company for the cannabis industry. Paragon is currently in the third stage of their three-stage ICO pre-sale. The company has a solid project idea, token design, and a core team and advisory board that includes celebrities and big names in business, tech and venture capital.
Paragon has been targeted on Slack and Reddit by several individuals who have implemented fairly elaborate scams in an attempt to get money from the company. Paragon reps feel that rather than keeping quiet, it’s important to tell their story so that anyone else running or looking to run an ICO is prepared to deal with this kind of situation, in addition to the phishing and DDoS attacks they might already expect. The company’s hope is to create a sense of solidarity and awareness amongst legitimate ICO owners to help them protect the security of their own companies and funds.
We got in touch with Paragon Chief Strategy Officer, Chuck Bogorad, to hear the whole story. He told us that the company has experienced three main attacks, including scamming and bullying/extortion, all of which took place via Slack and Reddit.
Here’s what happened
The first incident was when someone joined the official Paragon Slack pretending to be from coingecko.com. They offered rates much lower than those of the real Coingecko.
Eventually Paragon team members got suspicious and contacted Coingecko directly to verify — turned out their suspicions were true. Luckily Paragon found that out in time, before paying the scammers.
The second incident occurred when someone joined Coinschedule’s official Slack posing as a member of the Paragon team (Gareth Rhodes). They negotiated a premium placement for Paragon paying no money upfront, but promising a percentage of money raised. They also manufactured a fake contract on Paragon’s behalf.
That same someone then joined the Paragon slack calling themselves karen.coinschedule and negotiated ‘gold’ placement for them, quoting rates much lower than Coinschedule’s usual rates.
Unfortunately, this time Paragon got swindled — they paid, their placement was active, and they didn’t suspect a thing. Eventually they contacted karen.coinschedule again and when they didn’t get a reply, they contacted Coinschedule directly via email, and learned that they’d been scammed. Luckily they managed to come to a mutually acceptable solution with Coinschedule.
The third incident was the one involving extortion on Reddit. Reddit user Buster01 created a post calling Paragon a ‘scam’. The post appeared well-researched, though none of the links were actually very incriminating. Mostly it was related to past events in the lives of some of the team members (a video parody shot by the company’s CEO, circumstances of a complicated divorce of the CCO, etc), that are totally irrelevant to the current project and ICO.
The karen.coinschedule account in the Paragon Slack (who they knew to be the perpetrator of the Coinschedule scam) asked their CCO Egor Lavrov for money to stop defaming Paragon on Reddit. Lavrov paid, and Buster01’s post was removed immediately. karen.coinschedule also later confirmed to Paragon that they were indeed Buster01 on Reddit.
Then on Aug 26th, a Reddit user named tokentrader reposted the thread. It became the top thread of all time on the cryptocurrency subreddit, was pinned to the top briefly by the moderators, and was seen on /r/all. Someone (possibly the same people) started down-voting and concurrently up-voting the post, making it look like there was a ‘brigading’ incident in progress. Paragon was then immediately blamed for the brigading with video ‘proof’.
FYI here’s a list of Reddit-members directly involved:
https://www.reddit.com/user/tokentrader
What we learned
The takeaway from Paragon’s story is that projects looking to run an ICO need to be extremely diligent with their communications — double check email domains, and be on the alert for imposters. In terms of Reddit, of course it’s impossible to prevent random, determined users from making up slanderous stories, but of course it’s worth always paying close attention so that these kinds of situations can be quickly nipped in the bud, so to speak ;)
In more uplifting news, Paragon reports that the above incidents have had zero effects on their token sales. Their pre-sale is going very well and they’re looking forward to a solid crowdsale.
Paragon Chief Creative Officer, Egor Lavrov, stated:
Only no press is bad press. The number of users coming from Reddit because of this story rivals our other traffic sources.
A bit more about the company
Paragon is a company dedicated to legitimizing the cannabis industry using blockchain technology. All the data created in the process of production (from seed to dispensaries) will be stored on Smart Contracts, making it transparent and easy to verify for the end customer. Paragon will also have a brick and mortar presence — they plan to build high-tech co-working spaces in areas where cannabis is legal. In these spaces everything from rent to snacks will be payable by PRG, the Paragon token. PRG is an Ethereum-based (ERC20) token. Learn more about the project here.
