ICO Fraud on the Rise

by Michela Menting | 3Q 2017 | IN-4716

Enigma, a San Francisco based blockchain startup, is the latest outfit to fall victim to an Initial Coin Offering (ICO) heist. Ahead of its planned September ICO, fraudsters managed to socially engineer the Enigma community into handing over almost US$500,000 by setting up a fake pre-sale of tokens on the Ethereum blockchain. The perpetrators managed to compromise Enigma’s website (, mailing list, and a Slack account with administrative privileges. Once inside, they used the credentials to send out a scam email inviting investors to participate in the pre-sale, and added a similar announcement on the company’s website. The scam pointed to the fraudsters’ own cryptocurrency wallet for the pre-sale buy-in, and while not all backers in the community were duped, many handed over a total of 1,492 Ether coins before the fraudulent operation was shut down.

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