Confido Startup Disappeared Having Raised $374,000
November 22, 2017
The startup based on Ethereum Confido disappeared after it had raised $374,000 from investors for a three-day sale of tokens earlier this month.
The company explained the situation on its subreddit page: "Thank you for staying with us. Over the past two weeks, we have achieved incredible results, and cryptospace is beginning to acknowledge us. However, we must apologize to you. Now we are in a difficult situation, because we have legal problems caused by the contract concluded by us. We signed a contract that our legal advisers confirmed as having a minimum risk without any potential problems. I cannot and will not go into details, but they were mistaken. A problem arose <...> I, Joust Van Doorn, want to personally apologize for all the financial losses that this announcement will cause. We were never going to bring losses to our investors, but we could not foresee such a situation. "
Although Van Doorn's explanation seems sincere, this is far from being enough to appease the investors who have poured their money into the project.
The Confido project used smart contracts to process payments via escrow between buyers and sellers. The token sale was conducted from 6 to 8 November. At the time of writing the article, all Confido websites and pages in social networks are not working.
The Confido fiasco once again showed the negative side of the ICO-market, which legislators are struggling to identify and regulate. As more and more ICOs fail, or simply disappear into nowhere, governments are exerting more and more efforts to suppress the sales of tokens. China, South Korea and many other countries have already completely banned ICOs. In the United States, the Securities and Exchange Commission (SEC) makes great efforts to delineate the market between utility-tokens and security-tokens.
In the first ten months of 2017, ICOs raised $3.25 billion. Despite the fact that capital continues to flow into ICO projects, the market seems to have slowed in recent months. This is quite natural if we consider the total amount received for the month, as well as the average budget for an ICO.
Ethereum founder Vitalik Buterin has warned that in the near future the market will see more flexible ICOs. However, this should not deter investors from identifying goldmines. In fact, these rare but promising projects will be easier to find when the technologies and business models of the market improve. Buterin calls this paradigm 'Tokens 2.0' and says that it will set in in just a few years. At the same time, investors can expect even more cases like Confido.