Kik got a lot of press this week for all the wrong reasons. We saw two articles about the Kik ICO in The Wall Street Journal Monday and here’s just one of the articles we saw on coindesk (https://www.coindesk.com/70-million-far-kik-ico-kicks-off-small-scams-big-demand/).
It is becoming all too common to hear about real ICOs that end up with fraudulent links that fool people and end up stealing their money. Some of this is understandable there is a highly popular offering like Kik and people feel a sense of urgency – there’s not as much time to do the usual due diligence on a site.
But in this day and age, while it’s understandable, it’s also inexcusable.
It’s inexcusable because it’s preventable.
The Coindesk piece gets into the shortcomings of the Kik smart contract, the other piece that’s shocking is that companies aren’t doing more customer registrations on the front end. Snip is a great example of an ICO that has taken measures to reduce their risk of fraud. Snip is a very smart business – they are a news site that offers tokens to people who notify them of breaking news – a perfect fit for a news ecosystem. As part of their ICO, they are using a customer authentication back end powered by AuthenticID that supports full KYC/AML compliance as part of their registration process. Historically, and especially on blockchain, these registrations require a lot of effort and they can take days. The process Snip is using takes less than ten seconds after the user has submitted a selfie and the front and back photo of a driver’s license or passport.
If Kik had talked with Snip – a lot of this fraud/scam mess could have been avoided.
Fortunately, Snip is a popular ICO so hopefully people will take notice and some of the other ICOs will follow suit and add the same simple registration service to their ICO process and The Wall Street Journal won’t have to do any more of these articles.
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I can appreciate this article because it is showing how alt coins or bit coins are growing exponientially. Old and new companies are forming in order to offer ICO so they can get the start up capital or to gain capital for expansion. Only issue if this is mandated as a security where does that leave the marketplace and individuals who purchase coins? It will be interesting to see how this unfolds in the coming months.