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Over 15% of Crypto Projects Have at Least One Serious Red Flag

Based on new research made by the Wall Street Journal, there are quite a few crypto projects out there that raise eyebrows in one way or another. The recent plunge in crypto prices did have a positive effect on the markets as it exposed a lot of unsustainable projects. It also brought some sobriety even amongst the most passionate crypto enthusiasts and investors. The current situation is definitely something the cryptocurrency market needs as it roots out some of the obvious scams while altering the general approach to investing in the future.

The Wall Street Journal’s investigation into the whitepapers of more than 3,300 cryptocurrency offerings and ICOs, offered between 2017 and 2018, came with some alarming discoveries. According to their research, there are more than 500 crypto projects that are guilty of either plagiarism, misrepresentation of project founders’ identities, or promising unlikely returns.

Questionable Crypto Practices

The projects examined can be found on and Reporters uncovered plagiarism by comparing all the sentences from every whitepaper of those crypto projects. What they discovered was that more than 10,000 sentences appeared more than once.  Another thing they looked at was the identity of team members. They highlighted projects where no team members were provided and did a reverse image search to recognize identity misrepresentation.

Having no team or presenting fake team members, founders, or sponsors is already a well known red flag for fraudulent crypto projects and should be one of the first things a careful investor looks at. The reporters found unlikely promises on financial returns by searching for marketing phrases such as “high return” before examining each of the documents. Among the 500 projects, 30 are already under regulatory investigation, while more than half of them don’t even have a functioning website (every website was checked individually). They contacted all of those projects just to receive little to no response.

Regulatory Challenges

The results of the study are not surprising due to all the recent findings on the ICO projects. There are also a lot of regulatory concerns on the topic. At this point it is obvious that many companies have used this new way of fundraising to launch some questionable projects while others were downright scams. This has caused a lot of negative press, and even though the mainstream media is not always in the right, fraud is still one of the biggest problems in the cryptocurrency space.

The US Securities and Exchange Commision (SEC) is also clamping down on many crypto projects. Regulators from the US and Canada started a cooperative international regulatory action called “Operation Crypto Sweep,” earlier this year. Furthermore, SEC has called for international cooperation to enforce their regulatory orders, since many of the crypto projects reside outside of the US yet offer their tokens in the country. This is a common problem around the world due to the cryptocurrency characteristics.

What Can We Expect in 2019?

Even though there are a lot of scams present in the crypto space, there are still many ICO-funded projects that are transparent and have a working product. If you look at the current situation from another perspective: every investment category has its own scammers, those problems are not present solely among crypto projects.

The best regulatory way forward is to find the balance between allowing innovation while eliminating all the fraudulent projects out there. The recent slump in crypto prices definitely helps the latter as fraudulent projects most likely cease to exist when the market turns south.


All in all, the crypto space can be a very tricky place. While it presents an enormous opportunity, there are also a lot of risks involved. This is one of the reasons why we are developing a platform that gathers, evaluates, and enriches crypto news and information. We are constantly improving the real-time accuracy of news evaluation using the combination of community knowledge and artificial intelligence. If you are interested in advanced methods of news evaluation or if you are just a crypto enthusiast,  take a look at our blueprint and maybe even join our BLOCKBIRD movement while you’re at it.

January 21, 2019, Maks Levstek