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5 Oct, 2017 14:54

Wikipedia founder calls Initial Coin Offerings ‘absolute scams’

Wikipedia founder calls Initial Coin Offerings ‘absolute scams’

One of the fastest-growing ways to raise funds by selling token-based digital currencies or so-called initial coin offerings (ICOs) is an absolute scam, according to Wikipedia founder Jimmy Wales who warned investors from participating.

"I think blockchain is a super interesting technology, but there are a lot of fads going on right now... There are a lot of these initial coin offerings which in my opinion are absolute scams, and people should be very wary of things that are going on in that area," Wales told CNBC on Wednesday.

He said the blockchain technology that underpins bitcoin, and allows digital currencies to function and be transferred safely, will "be with us for some time to come."

According to data website Coinschedule.com, start-ups have raised $2.4 billion from ICOs this year.

In September, China, which accounts for about 90 percent of all cryptocurrency trading on exchanges banned ICOs, describing them as an unauthorized fundraising tool that may involve financial scams.

Beijing ordered individuals and organizations that have completed ICO fundraisings to make arrangements to return the money.

The move was followed by South Korea, with the country’s financial regulator saying it will ban money raising through all forms of virtual currencies.

In July, the US Securities and Exchange Commission warned that some ICOs should be regulated like other securities.

Authorities in Singapore and Canada have issued similar warnings.