Trustless Payment Startup Confido Makes Off with $375k of ICO Funds

Confido, an ICO startup whose name means “I trust”, has done a bunk with 1,235 ETH. The company was supposed to have been creating a trustless payment system using smart contracts. Instead, it was the project’s founders who have proven themselves trustless after deleting all their accounts and going dark. The $375,000 exit scam highlights the risks that are inherent to the still largely unregulated ICO market.

See also: Cracks Appear as Critics Label Bitconnect a Ponzi Scheme

Trust Less, Question More

As a since-deleted Medium article published by Confido explained:

Confido takes away the trust barrier in exchanges involving cryptocurrencies, while also staying decentralised and trustless.

After protesting of “legal issues” over the weekend, however, the startup hastily scrubbed its online presence. Google still has a cached version of the site and a who.is enquiry pulls up the following information, citing a residential Berlin address:

Joost van Doorn is also the project’s founder and CEO supposedly. It is unlikely that the company information is correct, although the name might be, given that van Doorn has since deactivated his personal Facebook account along with Confido’s. The confido.io domain was registered with Namecheap, who accept payment in bitcoin.

An FAQ on the company’s cached website poses such questions as “Why is the hard cap so low?”, to which they reply: “We think the current ICO space is messed up; companies are raising millions without a fully working product or existing customers. We have talked with financial analysts and we simply don’t need more than $400,000 to develop and market our project.”

Irony Upon Ironies and Insult to Injury

The Confido contract address currently has a balance of 0 ether and just 676 CFD tokens, worth a total of $21. As word broke of the exit scam on November 19, the token’s value plummeted by 94%. It’s currently trading on Kucoin, Etherdelta, and Mercatox, though suffice to say there aren’t many buyers.

Google webcache also reveals a snapshot of the team’s now deleted Twitter, where the ironies continue to stack up:

The 4.5 million CFD the team refer to currently sit in this address. On 4chan’s /biz/ messageboard where traders gather to troll, shill, and occasionally dispense sound investment advice, there was an abundance of pink wojaks as the despair sank in, and it was a similar story on Reddit.

What Hope of a Happy Ending?

There remains a slim chance of a happy ending to this sorry story. Tokenlot, who had promoted the Confido sale on their site, reportedly issued the following information after the exit scam came to light:

Days earlier, some of the /biz/ forum’s more astute users had posted warnings that the team behind Confido didn’t seem to exist, but were shot down with one sceptic jibing “You sold the future of online crypto commerce at 5 M market cap OP. You sold too early and you will have to live with that”.

In a thread on November 19, someone posted:

wait a second, is this real? I woke up not too long ago and I am down over $54K on my investment in CFD…I bought in with almost everything I had when it was .94 cents. What is happening? I am seeing rumors that the developers did an exit scam. Is this true? Does anyone know why their website is down? I’m not getting any responses from email or anything. I feel really f*****g sick. Can someone tell me please what is happening?

The Confido scam arrives the same day a survey revealed that 15% of institutional traders won’t go near ICOs until tighter regulation arrives. While the vast majority of initial coin offerings are conducted in good faith, all it takes is a few bad apples to ruin things for everyone.

As Confido were posting news of “legal troubles” which have been widely interpreted as the first phase of their planned exit, one Twitter user highlighted the fact that Coinmarketcap is running a trio of ads for projects which are dubious at best and fraudulent at worst. Bitcy, Resonance, and Bitconnect all promise “guaranteed returns”, which should be an instant warning sign. As the Confido case shows, however, it doesn’t require unrealistic claims to hook investors: all it takes is a plausible sounding ICO with a modest hard cap.

Trustless indeed.

What do you think can be done to protect investors from ICO scams? Let us know in the comments section below.

Images courtesy of Twitter.

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