According to the accounting firm Ernst and Young (EY), around $3.7 billion was raised through ICO funds up to date, but hackers have stolen over 10 percent. Thus, roughly about $400 million has been lost.
Ernst & Young said that hackers targeted ICOs because they allow raising millions of dollars within less time. They investigated 372 ICOs.
Although hackers use many ways to steal raised funds, phishing was the most common method. It is responsible for $1.5 million stolen from ICO funds each month according to the report.
The volume of ICOs has been down since the end of 2017 according to this report. And in November, only less than 25 percent of ICOs reached their target.
The study suggests that cryptocurrency investing is getting popular among young companies. The global innovation leader in blockchain technology at Ernst & Young (EY), Paul Brody said that it is challenging for ICOs to reach their target because of low project quality.
he said in an interview,
“The volume just exploded, people raised their fundraising goals, and the quality just dropped. We were wonder by the quality of some of the white papers, we see clear coding errors, and we see conflicts of interest between the companies issuing tokens and the community of token holders”.
Firms are raising money through ICOs to build new technology and funds for businesses that use cryptocurrencies. According to Ernst & Young, most of the projects’ need for cryptocurrencies and blockchain is often unjustified.
Further, most of the valuations of ICOs were consider by “FOMO” (Fear of Missing Out). This makes investors invest quickly with ten shortest lasting ICOs attracting $300,000 per second on average.
Many governments have started cracking down on ICOs. South Korea and China have implied an absolute ban of ICOs since last September. SEC (Securities and Exchange Commission) has remained wary of the ICOs although not banned them or added new regulations. SEC warned about celebrities need to disclose their compensation for advertising their ICO.
“These endorsements may be unlawful if they do not disclose the nature, source, and amount of any compensation paid, directly or indirectly, by the company in exchange for the endorsement.”
Source of the article: https://coinpedia.org/news/ernst-young-says-hackers-stole-ico-funds/
