A cryptocurrency start-up that managed to raise around $375,000 via an initial coin offering, has reportedly disappeared with all that money. The company known as Confido states that is a company working for the development of “smart contracts” that can act as an escrow between those looking to buy and those looking to sell via transactions in the currency.
Traditional escrows are usually held by a third party company, but with the addition of smart contracts, both sides are fulfilled in pay and payment when the deal is completed after meeting certain conditions decided by both sides. The ICO that took place earlier in the month of November, was done through a platform known as TokenLot, who facilitates the fundraising in these types of scenarios. For those who don’t know, an ICO is an initial coin offering.
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This works similarly to a traditional IPO, where investors buy a token of the company in exchange for fiat currency. After they have the currency, they can then choose to hold it for investment purposes or cash it in for a fiat currency of their choice. The token for the company was trading at around $1.20 as of the 14th of November, but then dropped sharply following the disappearance of the Confido team. The coin hit as low as $0.02 after the news was released that those in charge of the company simply disappeared with the money.
A post regarding the situation stated that there was a large amount of legal trouble with this situation. The post stated that “We signed the contract with assurance from our legal advisor that there was minimal risk and it would not be an issue. I can’t and won’t go into details, but he was wrong. It is a problem.”