Confido's founders vanish after raising $375,000 in an ICO

Confido was the light in the dark that promised better times ahead.

After a string of Initial Coin Offerings that brought buyers nothing but grief (and lost money), the scrappy little startup become the darling of the crypto world. It was only raising $400,000. It was running lean.

But now, just two weeks after the ICO ended, the project's website and founders are all gone, and the price of the Confido token (CFD) is near zero.

SEE ALSO:How to make sure you don't get swindled in an ICO

To see why Confido was successful -- at first, at least -- we need to go a little further back. ICOs, or digital token crowdsales, are events in which startups raise funds by selling digital tokens to anyone willing to participate. And this summer, ICOs for projects such as 0x, Civic and district0x were incredibly successful: The projects’ founders raised tens of millions of dollars, and shortly after the tokens became tradable their value surged, bringing quick and easy profits to token owners.

But as the price of Bitcoin dropped mid-September, ICOs too started to underperform, with tokens often dropping in value compared to ICO prices. Many projects tried to raise tens or even hundreds of millions of dollars, which investors started perceiving as greed. Worse, they gave huge pre-sale bonuses to early backers, who sold their tokens at a profit right after they became tradable, which kept the price of tokens down.

Advertised as a "trustless escrow payment solution using smart contracts with a unique shipment tracking feature," Confido seemed to be exactly what the ICO market needed: A small, humble team that only wanted to raise about $400,000 and not a cent more.

"We think the current ICO space is messed up; companies are raising millions without a fully working product or existing customers. We have talked with financial analysts and we simply don’t need more than $400,000 to develop and market our project. ICO’s are a great opportunity to get funding for a project, but we don’t want to abuse this opportunity," said the project's website, which has since disappeared.

The team, headed by Joost van Doorn, was unknown in the crypto world. The project had no advisors, and it wasn't peer-reviewed by experts. Still, many jumped at the opportunity to participate in a project that could only accommodate a very small number of backers and with a projected market cap so small that the growth potential is huge.

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The Confido "team."Credit: Confido/Wayback Machine

And Confido delivered. The team collected 1235 ETH -- worth around $375,000 at ICO time -- and shortly after the CFD tokens became tradable their value skyrocketed. At one point, the price of one CFD token rose to $1.20, roughly twenty times the amount of the initial ICO price. This price jump made Confido one of the best-performing ICOs ever in terms of short-term token price rise, and the tiny project suddenly had a market cap of $10 million.

While Confido's advertised product wasn't something that could shake the foundations of the crypto world, the idea that ICOs can succeed by being small and humble appealed to many. After Confido's initial success, the social media hype turned to projects that aimed to raise modest funding; Verify, for example, aims to raise up to $2.5 million in an upcoming ICO, and Bounty0X is looking to raise a total of $1.75 million.

But something wasn't right with Confido. Those who examined the project's website closely could see signs of trouble, though the hype in various Slack channels and crypto forums was too big for anyone to care. For example, the site said the funds collected in the ICO would be escrowed by a company called "Kraft & Wurgaft, P.C.," but Google can't find any company by that name. The LinkedIn account of the team's CTO disappeared shortly after the ICO (LinkedIn accounts of some team members are still active at the time of writing -- see here and here -- but there are indications that they are fake).

And then the news hit. A message on Confido's subreddit said that the company is having unspecified legal problems which will delay development "until a resolution is found."

"I, Joost, van Doorn, want to personally apologise for any financial damages this announcement will cause to people. It was never our intention to hurt investors, we didn't see this coming," the message read.

Shortly after that, however, Confido started deleting all traces of its existence from the internet. The subreddit and the project's webpage were taken down, as were the project's Twitter and Facebook pages. The personal social profiles of van Doorn were deleted as well. The only one left appears to have been the Confido support guy Chris, who posted on Reddit saying he has no clue about what's going on.

"I have absolutely no idea what has happened here. The removal of all of our social media platforms and website has come as a complete surprise to me," he wrote.

From rags to riches -- and back to rags again.Credit: Coinmarketcap.com

In a matter of hours, Confido was, for the most part, gone, and so was the value of the CFD token, which currently trades at about $0.03, if you can find a buyer. Confido was lucrative to those who sold their tokens on time, but many participants lost money (read here for an account of an investor who claims he'd lost $90,000 on Confido).

As it stands, we're unlikely to hear from Confido again. But it's an important lesson for anyone looking to participate in an ICO. It's relatively easy to put together a website with a few fake profiles and a whitepaper that sounds just interesting enough to attract investors -- many of whom don't have the technical chops to tell crappy projects from good ones. With a little bit of social buzz, even obvious scams can take off, and there's no one to protect you once you send your ether or bitcoin away.

Disclosure: I did not participate in the Confido ICO and I've never owned CFD tokens.

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