With the rapid growth in cryptocurrency space, the incidents of scams, frauds, and hacks have also increased, putting the digital asset economy in a risky environment. Investors and users seem in a doubtful phase considering the crypto market.
Recently, the Wall Street Journal carried out research in which it claims that hundreds of cryptocurrency offerings indicated signs of fraudulent activity, improbable returns, and plagiarism, as published on Dec. 27.
In order to analyze cryptocurrency projects, WSJ evaluated ‘white papers.’ of 3,291 cryptocurrency projects that announced an initial coin offering (ICO) from three websites — ICOBench.com, Tokendata.io, and ICORating.com.
Notably, white paper is an important precursor document for an Initial Coin Offering (ICO). It is an informational document issued by a company that describes the company’s position, team biography, and technical specifics of a project, and is drafted to be used as a marketing tool for potential investors. It designs a basic structure of the entire project and the intended solution.
After the documents were downloaded, the reporters considered both the duplicate and native language papers. They noted, “To identify the duplicate language, the Journal compared sentences with at least ten unique words to every other sentence in other white papers. Reporters then read and reviewed nearly 10,000 sentences appearing more than once among the 3,291 papers analyzed and removed technical and legal sounding language. Then, the Journal compared reported offering dates to determine which document first published any given sentence and excluded those projects from this database.”
The study found out that 16 percent or 513 of the 3,291 white papers were identified with Plagiarism, identity theft, and promises of implausible returns. Also, more than 2,000 White Papers contained alluring terms such as, “nothing to lose, guaranteed profit, return on investment, highest return, high return, funds profit, no risk, and little risk.”
Some of the crypto projects even shown fake team on their website to balloon the project’s credibility and size of operations. WSJ made an effort to discover fake team members by reverse image search of photos of 343 projects.
Back in August, WSJ unveiled in a study that through organized ‘trading groups,’ cryptocurrency price manipulation was conducted hugely.