An exit scam coming from China has cost investors $60Mn, but the theft still only accounts for a small percentage of the total amount raised through ICOs. What may have investors more worried are projects that are slowly siphoning money away with no products in sight. Meanwhile, token prices are falling sharply across board.

In the past week, the largest exit scam yet has reportedly been pulled by Shenzhen Puyin Blockchain Group in China. The company ran three ICOs - ACChain, Puyin Coin and BioLifeChain with the total amount raised of up to $60Mn. The scams are being investigated by State Market Regulatory Administration (SMRA) in China. Another one was discovered last week when NVO supposedly exit scammed after raising 3000 BTC ($8Mn at the time) to build a decentralized exchange and wallet.

Since Diar initially visited the topic, there was also an exit scam of Block Broker, an ICO to fund a platform to “completely eliminate ICO fraud by creating a 100% safe investment environment”(Diar, 23 April). Block Broker was rated on ICO review services such as TrackICO with five stars. The house of cards collapsed after it was discovered that the CEO’s profile picture was of an unaffiliated photographer. Block Broker ran away with more than $3Mn raised.

The total amount of successful exit scam ICOs is now nearing $100 Mn. Unsurprisingly, the blatant exit scams continue to plague the largely unregulated ICO sector where the founders have no contractual obligation to deliver a product. After raising millions of dollars with no string attached, the founders’ incentives to actually build a valuable company are very limited. Even if the founders were to build a valuable venture, it’s unclear at best whether the price of the utility token would reflect the success of the company.

With proper due diligence, the most blatant exit scams are not hard to pick out. Most promise unrealistic returns and run for a limited time to capitalize on the fear of missing out.