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Cryptocurrencies

Study shows more than 10 percent of funds raised in ICOs are stolen or lost

Tuesday 23 January 2018 | 11:04 AM CET

More than 10% of USD 3.7 billion raised through ICOs are lost or stolen in hacker attacks, according to new research by Ernst & Young.

The professional services company analysed more than 372 ICOs, in which new digital currencies are distributed to buyers, and found that roughly USD 400 million of the total USD 3.7 billion funds raised to date had been stolen, according to research.

According to the report, phishing was the most widely used hacking technique for ICOs, with hackers stealing up to USD 1.5 million in ICO proceeds per month. The research also noted that the volume of ICOs has been slowing since late 2017. Less than 25% of ICOs reached their target in November 2017, compared with 90% in June 2017. The study also found several instances in which the underlying software code of a project contained hidden investment terms that had not been disclosed, or contradicted previous disclosures.

In ICOs companies typically raise money to build new technology platforms or to fund businesses that use cryptocurrencies, also called tokens, and blockchain, the software that underpins them. Yet for many of these projects the need for blockchain and cryptocurrencies is often unjustified, according to EY.

The challenges faced by more recent ICOs in reaching their targets are partly attributable to the lower quality of projects, as well as issues that have emerged around earlier projects, said the global innovation leader for blockchain technology at Ernst & Young (EY) for Reuters.

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