EY Report: More Than 10 % of ICO Funds Are Stolen Or Lost

According to the report, more than 10% of funds raised by initial coin offering, which is about $400 million are lost or stolen in hacker attacks.

About 372 ICOs were studied around the world and found out that the amount of the ICO offerings is equal to the twice amount of VC investment in blockchain projects around $ 3,7 billion. The U.S. is the biggest ICO origination country with over US$1 billion, followed by China and Russia, each with over US$300 million.

The report says, that hackers take benefits from the “hype, irreversibility of blockchain-based transactions and basic coding errors”. Funds are misappropriated via substituting project wallet addresses (phishing, site hacking), accessing private keys and stealing funds from wallets, or hacking stock exchanges and wallets.

Another growing risk, that investors are faced is a cryptomarket regulation. There are various levels of regulatory strictness for ICOs in different countries. The result is that those, who look to conduct illegal activity with an offering could move to jurisdictions.

For example, since last September in China ICOs have been banned by regulators.

As the report mentions, the ICO volumes have been declining since the middle of 2017. Compared with 90% of last June, only 25% of projects last November were able to reach fundraising goals.

EY warned, that token valuations are driven by “Fear of Missing Out,” without any connection to market fundamentals. The report noted that ICOs are typically supported  only by a white paper that describes the planned technology and a small piece of software that governs how to use, issue and manage the tokens.

Paul Brody, the global innovation blockchain leader at EY thinks, that there is a risk of having the market swamped with quantity over quality of investments, as ICOs continue to gain popularity and leading players emerge globally.

The post EY Report: More Than 10 % of ICO Funds Are Stolen Or Lost appeared first on Bitcoin News.

from Bitcoin News https://www.cryptocynews.com/ey-report-10-ico-funds-stolen-lost/
bitcoin news