The initial coin offering may have all but died, but the ICO scammer marches on regardless. Whereas legitimate projects have to wrangle with all kinds of challenges including the strength of the market, generating value for investors, creating a real product and actually delivering on the promises they make, the soulless scammer is unencumbered by technical constraints, work ethic or any sense of decency.
Much like the humble cockroach, there are few conditions in which the ICO scammer cannot operate. Even with peak ICO and token mania well behind us, scammers persist. There are a few things guaranteed to make scammers scatter, however, including legal action, regulatory enforcement, and of course, unwanted press. The following ICOs have all been branded scams, despite their orchestrators noisily protesting their innocence.Blockchain may be a fertile soil for the germination of new ideas, but it is also a dumping ground for risible concepts and con artists who obfuscate their true intentions. One idea that has been floating around the crypto bowl for some time now is of a gold-backed cryptocurrency. Karatbars is a prime example of the gold-backed fad and one which has drawn some serious questions lately.
In 2018, the German firm launched Karatgold Coin (KBC) after an ICO that reportedly raised $100 million. To follow that first fundraiser, Karatbars is now looking to conduct another ICO in 2019. This time the company claims to be creating the Karatbank Coin (confusingly also KBC) for its cryptocurrency bank in Miami, leading the Florida Office of Financial Regulation (OFR) to open an investigation into the company which is still ongoing.
In a video on the Karatbars homepage, Dr. Harald Seiz introduces himself as “the visionary and founder of Karatbars” which is enough to raise an eyebrow if not a red flag. A Youtube video on April 2019 titled ‘Karatbars Harald Seiz To Create 20K Millionaires by 2021!’ is enough to raise greater suspicion still. Products on the Karatbars site include gift cards, credit cards and actual paper money, all of which can be sold with affiliate marketing. Regulators in the Netherlands called this gold buying and selling system ‘multi-level marketing,’ while Namibia was plain enough to call it a ‘pyramid scheme.’
What of the gold itself on which the entire Karatbars concept is built? Independent researchers have failed to verify the existence of the goldmine which the company claims to own. While cynical minds have often claimed that a goldmine is simply a hole in the ground owned by a liar, in the case of Karatbar, not even the hole exists.