Study Claims More Than 80% of ICOs are Scam

Satis Group estimates only 8% of Initial Coin Offerings went on trading.

by Marin Marinov
23 March • 2 min
In News

Most of the Initial Coin Offerings (ICOs) are scam and less than one-tenth of them have managed to go on trading, a study by Satis Group estimates. Using public available data, the ICO advisory company puts 81% of the coin offerings in the category of dishonest schemes and only 8% in the group that had some kind of success.

The research classifies the ICOs in four groups before trading - Scams, Failed, Gone Dead and Went on trading - and in three groups after listing on an exchange - Dwindling, Promising and Successful.

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Before trading

· Scams - 81%: explained as initial coin offering with no intention of fulfilling project development duties with the funds, and/or being labelled as a scam by the community (message boards, website or other online information). Satis Group has not published the methodology of analyzing community opinions such as resources, criteria for choosing and еvaluations of the messages;

· Failed - 6%: the ICOs that raised money but were abandoned or refunded and did not complete the entire process of initial offering, including missing the soft cap;

· Gone Dead – 5%: projects that raised funding and completed the process, but were not listed on exchanges for trading and without a code contribution in Github on a rolling three-month basis;

· Went on trading - 8%.

After listing

Satis has evaluated the success on the base of three criteria after listing on an exchange: 1. deployment (in test or at minimum) of a distributed ledger (when used base-layer protocol) or platform (when used an app/utility token); 2. available transparent project roadmap on the ICO website; 3. Github code contribution activity in a three-month period;

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· Dwindling – 47%: had one of the above criteria;

· Promising – 20%: two of the above criteria;

· Successful – 34%: all of the above criteria.

Another survey, carried out by the North American Securities Administrators Association (NASAA) earlier this month has found that securities regulators identified ICOs and cryptocurrencies as the asset with the highest risk of fraud - 94%. The research also shows that Millennials are the most vulnerable group.