It's no secret "buyer beware" has become a mantra in the world of ICOs, where blockchain startups are raising millions, sometimes with just a white paper, a bright idea and a few lines of code.
Indeed, The Wall Street Journal recently found that 271 of 1,450 ICOs it analyzed displayed "red flags that include plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams."
Still, with regular Joes turning into crypto millionaires, however infrequently, they're enticing bets for investors.
Expanding on the WSJ's analysis, CoinDesk wanted to make it clear what kind of approaches fraudulent ICOs take, and there may be no better poster-child than Pink Taxi Coin and its PTT crypto token, recently promoted on Twitter by John McAfee, an entrepreneur who made his name selling software but has recently pivoted to crypto.
A McAfee endorsement has no doubt become a worrisome sign for token investors, but there's much more to Pink Taxi Coin than just a bad endorsement.
Paul Walsh, CEO of MetaCert, which recently launched a browser extension to warn users when they visit a cryptocurrency phishing or scam site, told CoinDesk:
"There are certainly enough red flags surrounding this ICO warranting a warning to potential investors, starting with the reports of plagiarism."
CoinDesk first heard about Pink Taxi Coin from Lithuania-based ride-hailing app A2B Taxi (which has an ICO underway).
According to the A2B Taxi spokesperson, Pink Taxi Coin had plagiarized basically everything from A2B Taxi – "website design, content materials, texts, even our advisor's video explaining our token model."
Sure enough, when CoinDesk visited Pink Taxi Coin's original website (archived version) – aside from the name change and a shift from a green theme to a pink one – the entire page was seemingly copied and pasted from A2B Taxi's site. The text, formatting and much of the artwork were identical.
Could be a coincidence. Screen shots courtesy A2B Taxi.
The Pink Taxi white paper (archived version), from disclaimer to the appendix, was also identical to A2B Taxi's, though excessive use of a thesaurus had made that difficult to demonstrate through a simple control-F search. For example, the statement "the payments on A2B Taxi app will be completed using cryptocurrency" had been modified within the Pink Taxi Coin white paper to "the payments on PINK Taxi application will be finished utilizing cryptocurrency."
On the whole, these changes made the paper difficult to parse, if not completely meaningless.
"I would not tell that plagiarism is something unseen or new to the ICO market," A2B Taxi's blockchain advisor Vytautas Kaseta told CoinDesk, adding:
"But I think this case is just another pure scam. Everything was just copy-pasted."
Another red flag: where Pink Taxi Coin's content was original, it was extremely poorly written.
On Telegram, for example, the company wrote, "Great news.. Jhon Mcafee join PinkTaxiCoin as an advisor..." Plus the heading of one page on its site is "Get Yourself Register" – yet the instructions for depositing ether are written in clear, idiomatic English.
The general inability to produce decent English copy anywhere except when it came to the directions for sending the company money is suspicious, especially for a project that claims to be based in the UK.
Pink Taxi Coin was caught in the act of plagiarizing A2B Taxi – actually, the A2B Taxi team called them out on Twitter.
The statement explained that Pink Taxi Group Ltd. U.K. had hired an unnamed "third-party agency" to develop its website and marketing materials, and that this agency was the one to blame for the plagiarism. It went further, saying that Pink Taxi Group has "launched legal notice to the agency" and, of course, fired it.
Yet, Walsh doesn't buy it, primarily because it seems the company is at it again.
He told CoinDesk:
"Despite the announcement from Pink Taxi about this error, our team also determined that their website still contains plagiarism."
Following the apology, Walsh continued, Pink Taxi Coin's prototype page continued to use images of another ride-hailing application, Lyft, merely stripping the Lyft branding away. That page was not archived and is no longer available.
Separately, CoinDesk also found that text on the updated Pink Taxi Coin site about "women economic empowerment" is plagiarized from a European Parliament report.
Where's the team?
What was very different between A2B Taxi and Pink Taxi Coin's site and white paper was Pink Taxi Coin's lack of a legitimate team, another serious red flag for investors looking at which ICO projects to invest in.
Where A2B Taxi's website listed a team including the founder, developers, designers and advisors, Pink Taxi Coin's page listed an "advisory team" of three: John McAfee, his wife Janice McAfee and Sherri (just Sherri). And Pink Taxi Coin's white paper left out the "team" section – present in A2B Taxi's original – entirely.
There is no indication anywhere in Pink Taxi Coin's materials about who is building the product. The founder's name is not available, nor are the names of any developers or other employees.
The Pink Taxi Coin team, such as it is. Screenshot by CoinDesk.
And this led Kaseta to comment that Pink Taxi Coin has "no real people behind [the] project."
CoinDesk sent emails requesting information about the team to Pink Taxi Coin's support address multiple times, eventually getting this response: "Your request have been forward to the concerned department."
And mirroring the experience on the website, when CoinDesk asked about how to deposit ether, we got a detailed answer almost immediately.
The statement apologizing for Pink Taxi Coin's plagiarism insisted that skeptics could search online to confirm that the company exists. Yet the company fails to stick to a consistent name throughout the one-page document: "Pink Taxi Group Ltd. U.K.," at the top, becomes "Team, Pink Taxi Ltd." in the signature.
According to Pink Taxi Coin, "Our authenticity speaks for itself."
As previously mentioned, an endorsement from McAfee isn't looked at with pride by many in the cryptocurrency space today.
And there's good reason. Shortly after tweeting about his support of the Pink Taxi Coin project – and making apparently untrue statements about the company, for example, that it currently operates in 50 cities – McAfee revealed that he'd charged $500,000 for the tweet.
Furthermore, when A2B Taxi's art director Tomas Stasiulevicius asked McAfee why he was promoting a project that "bluntly steals" others' work, McAfee responded with what Kaseta called "threatening posts."
"You are a scammer my friend," McAfee told Stasiulevicius, adding, "I strongly suggest you drop this, unless you would like my FULL attention?"
That said, it's not just McAfee who should raise alarm bells when investigating ICOs.
After a spate of celebrities began endorsing various ICO projects, the SEC sent out a warning to investors about these kinds of endorsements, going so far as to say that the celebrities could be running afoul of "anti-touting" laws if they don't state what compensation they received.
Not only that, but several of these celebrity-endorsed crypto token projects have faced legal sanction – for example, the founders of Centra, a project that boxer Floyd Mayweather endorsed, face federal fraud charges. Another ICO, Bitcoiin, which was endorsed by actor Steven Segal, received cease-and-desist orders from the state of New Jersey.
Another way Pink Taxi Coin tried to cultivate an aura of legitimacy is by presenting articles from reputable news outlets as if they were referring to the team behind Pink Taxi Coin itself.
"It is extremely convenient for them," Walsh said, "that there are existing videos and articles talking about the Pink Taxi concept, which they gladly link to on their homepage, as it helps prop up this company's alleged legitimacy in the eyes of would-be investors."
"Extremely convenient" videos. Screenshot by CoinDesk.
These materials exist because pink taxis – which cater only to women and hire exclusively women drivers – are a legitimate, working business model in many cities around the world. Indeed, the concept has proven popular in cities where the rates of sexual assault are high, including several cities in Muslim-majority countries, as well as in Latin America and Britain.
Pink taxis are a just that, though: a concept, not a company. And Pink Taxi Coin seems to be attempting to exploit potential confusion about that fact.
Each of the articles listed on Pink Taxi Coin's site is talking about a separate entity: there's a BBC article about a British company called Pink Ladies, an Al Jazeera article about a Pakistani company called Paxi, a Khaleej Times article about an Emirati company called Dubai Taxi Corp., a Hype article about a Malaysian company called Riding Pink, a Wall Street Journal article about an Indian company called Meru Cab, and a CNN article about an Egyptian company called Pink Taxi.
CoinDesk reached out these companies, and while most did not respond before press time, a Riding Pink representative said:
"This is a blatant misuse of our brand name and we are not in any way affiliated with Pink Taxi Ltd UK."
Yet, if that wasn't enough, there's a Medium post by a Kyle Jones – his only post – supporting the company: "you can't afford to miss this ICO," the headline blares.
Except, we dug into the author, and it turns out there is no Kyle Jones. The picture used on Medium is of a college professor who is not named Kyle Jones, did not write the Medium post and is not – he told CoinDesk – in any way associated with Pink Taxi Coin.
Here's your chance
Last, but not least, while the prices of certain cryptocurrencies have skyrocketed since they were first launched (think bitcoin and ethereum), promises of meteoric profit by the ICO issuers themselves are generally a bad sign.
For instance, on Pink Taxi Coin's Telegram channel – whose 1,600 subscribers are not allowed to post – the ICO issuer promised investors outsized profits, comparing it to bitcoin directly.
"You didn't invest in Bitcoin in 2009. Here's your second chance!" the post stated, adding: "You want the rich lavish lifestyle? Put your money where your mouth is!"
It went on, telling investors to buy before others caught on and to embrace the risk.
In case the message wasn't clear enough, a subsequent post said, "Soon PTT will be trading at 5 $."
Notably, the $5 price target has been lowered in revisions to the Pink Taxi Coin website. It is $1 at the time of writing.
This kind of promotion, playing to cryptocurrency enthusiasts' (and the wider world's) fear of missing out (FOMO), is such a problem that the SEC has repeatedly warned investors about such advertising. The regulator even went so far as to create a parody site to educate investors on what to look for when deciding whether an ICO investment is legitimate or fraudulent.
Echoing the SEC here, CoinDesk would like to remind you to take a deep breath and do some research before throwing your life savings (or even the change you found on the ground today) into an ICO. In many cases, like Pink Taxi Coin, the red flags aren't hard to spot.
Pink taxis image via Shutterstock