Another Day, Another Exit Scam: The LoopX Story
Unfortunately, the cryptocurrency is space is plagued with illegal activities ranging from Ponzi schemes disguised as cloud mining sites to fake initial coin offerings (ICO) that were only created to steal investors money. The “ICO”, of blockchain project LoopX, falls under the latter category.
LoopX has reportedly raised a total of 2,446 ETH and 276 BTC during its multi-stage token offering in January 2018, amounting to an equivalent of over USD 4.5 million. This is not a small amount given the current climate in the cooling ICO market.
On February 12, the website of the LoopX, a cryptocurrency “startup” that claimed to have developed an algorithmic trading software, went offline in what very evidently looks like an ICO exit scam. The company also shut down its social media accounts.
LoopX’s claim to have developed a trading software, which acts as a plug-and-play make money online application for generating regular profits in the cryptocurrency markets, should have been a red flag to investors ahead of the token sale. Combined with the statement that “LoopX will publish a revolutionized Peer-to-Peer trading platform where users as easy as a mouseclick can give us the opportunity to put their money to work” as well as the promise of weekly returns from its lending program should have been clear enough signals for investors to recognize that LoopX was never more than an ICO scam.
On Reddit, user named ghostwxrk, even warned the cryptocurrency community about LoopX being a scam a month before its perpetrators exited with investor funds. Ghostwxrk in a post highlighted the project’s lack of transparency about its software and its team, a mismatch between their fundraising claims and their comparatively tiny social media presence as well as the promise of regular returns as major red flags that indicate that the project is likely a scam.
The LoopX story once again highlights the need for thorough due diligence when investing in an initial coin offering as the lack of barriers to entry to launching a token sale have attracted a flurry of scammers as well as mediocre startups looking for quick-and-easy funding.
In the last few months, we have also been able to witness the exit scams of Confido, Prodeum, and the collapse of the long-time suspected Ponzi scheme BitConnect, which have shown us the necessity of conducting in-depth research before placing funds into any ICO or blockchain platform.
Any investment platform that makes outlandish claims combined with the promise of regular returns is certain to be a scam. Hence, if you see anything of this sort on an ICO or a blockchain project, click away.