Cryptocurrency exchange KuCoin has announced that it will reimburse investors who used its platform to invest in the Confido initial coin offering (ICO). The Confido development team announced that the project has been shelved after raising $347,000 in an ICO, leading many to call the ICO a scam.
“So far, after making our best attempts, KuCoin team is still not able to have an effective communication with CFD team and comprehend their updates. To ensure users’ interests and minimize the loss in CFD asset investment, KuCoin provides users an emergency solution … for all the KuCoin users who had made CFD trades … KuCoin is going to trade users’ purchase net value at the rate of 0.0000038 BTC (approximately $0.03)/CFD and directly deposit into users’ accounts.”
The exchange plans to have all users’ accounts credited on or before November 30.
Issues in the ICO industry
The Confido scam is just one of the examples of the various issues confronted in the ICO market due to the lack of regulations covering the sector. Many ICOs most likely fall under existing securities regulations, but a great number have tried to disclaim their way out of any responsibility.
The lack of effective oversight and the incredible popularity of cryptocurrencies and ICOs will likely lead to even more fraudulent activities in the space. However, regulators are taking notice, with the European Securities & Markets Authority (ESMA) strongly indicating their concern that ICOs may be skirting the law. Furthermore, the US Securities and Exchange Commission (SEC) announced the creation of a new “Cyber Unit” in September. This group would have broad powers, including oversight over ICO-related activities.
Rumors and letters
Rumors have been circulating that Confido themselves may issue a full refund to investors following the circulation of a dubious letter purporting to be issued by the company’s law firm. It remains to be seen if this will come to pass, but without confirmation of the letter’s authenticity, investors aren’t exactly holding their breath.