Ernst & Young: 10% of the $ 3.7 Billion collected during the ICOs was lost or stolen

A new research by Ernst & Young argues that more than 10% of funds received during the initial placement of coins were stolen or lost. The results and conclusions are combined with a report detailing what Ernst & Young considers a risk of investing in such a little regulated market. In conducting its research, Ernst & Young cooperated with the iB group to analyze 372 ICOs in the cryptocurrency area, but the professional service company did not determine the time frame in its conclusions. According to the report, the research groups received data from "public sources through exchanges, data aggregators, ICO reports, ICO trackers, news sites, blockchains of network scanners / platforms and specialized social networks."

 They found that for the reviewed ICO, approximately $ 400 million with a capital investment of $ 3.7 billion or lost, or stolen. To steal funds, hackers preferred phishing attacks to the greatest degree, so they forced ICO participants to send crypto or fiat to fraudulent websites. The study says that hackers generally received $ 1.5 million monthly with phishing.

Hackers, undoubtedly, saw that ISO is an easy prey, as last year this model of fund raising attracted billions of investment dollars. As reported in the report, in some ISOs investors invest an average of 300 thousand dollars a second. The largest inflow of money (90%) from the ICO took place in June 2017, reaching the goal of raising funds at the peak of the boom. Nevertheless, this investment madness has cooled down in the last months of the year, since only 25% of the ICO achieved its goals in November.

In an interview with Reuters, Paul Brody, Ernst & Young's global innovation leader in blockchain technology, attributes this decline to poorly designed and low-quality projects. 

He notes:

"We were shocked 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." 

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 Investors, according to the consulting firm Ernst & Young, often did not pay attention to the obvious problems of projects conducted by ICO, including obvious errors of coding in White Paper, fearing losing monetary benefits. Thus, the service company believes that the irrational evaluation of the tokens led to an ICO boom without any relation to market principles.

It is important to note that Ernst & Young does not deny the ICO the effectiveness of the application as a fund-raising model. Ernst & Young is a financial consulting company, and therefore this report is intended to raise awareness about investment, and how to make decisions in the cryptocurrency environment correctly.

In addition, this advice, and these warnings - deserved. 10% of the stolen funds ICO adds even more losses to the ever-increasing share of broken assets. Hackers have long been chosen as the target for the crypto-exchange community, and since crypto-space is trying to create a better infrastructure to neutralize hacker attacks, it is important to remain vigilant in order to avoid such pitfalls.

It is also advisable to do the proper research before investing in the ICO. The unregulated largely cryptocurrency world is fraught with risks from unsuccessful projects to frankly fraudulent exits and Ponzi schemes. Thus, it is better to be informed and cautious when choosing where to invest your money, regardless of whether it is a cryptocurrency, ICO or something else.