Wikipedia Founder: ICOs Can Be 'Absolute Scams'

NEWS
Nikhilesh De
Oct 5, 2017 at 20:30 UTC  |  Updated  Oct 6, 2017 at 16:38 UTC

The founder of Wikipedia had some harsh words for initial coin offerings (ICOs) in a new interview this morning.

Jimmy Wales, speaking on CNBC, said that he thinks many ICOs – through which cryptographic tokens are sold to fund the bootstrapping and development of a new blockchain network – are "absolute scams."

"There are a lot of these initial coin offerings which are in my opinion are absolute scams and people should be very wary of things that are going on in that area," he told the network.

That said, he said the underlying technology behind such offerings is "super interesting," going so far as to say that blockchain will ""be with us for some time to come," according to CNBC.

Wales' comments echo those issued by other observers in the space, including those given in the past week by Jay Clayton, the head of the U.S. Securities and Exchange Commission. Speaking before Congress earlier this week, Clayton argued that the risk of fraud is worse than in the heyday of penny stock scams.

"Pump-and-dump – it's actually easier here than it is in the penny stock area, because it's all electronic, it's all anonymous, [and] it's harder to catch the bad guys at the end of the day," he said at the time.

In July, the SEC released guidance noting that digital tokens could be treated like securities, and were "subject to the requirements of the federal securities law" under certain circumstances, and a number of other regulators have issued similar statements in recent months.

In contrast, other governments such China and South Korea have gone as far as banning the use of the funding model altogether.

Image via Joi Ito / Wikimedia Commons.

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