Blockchain Sister Startups Allegedly Pull $8 Million Exit Scam

Published at: May 16, 2019

Blockchain startups RepuX and JoyToken have reportedly pulled a joint initial coin offering (ICO) exit scam, according to an exposé by Hard Fork of The Next Web (TNW) on May 16.

RepuX and JoyToken reportedly ran their ICO promotions during March and April of 2018, and are now walking away with $4.7 million and $3.3 million, respectively. As far as the startups’ stated plans were concerned, Hard Fork reports:

“RepuX claimed that it was trying to build what it called a ‘blockchain-powered data marketplace,’ while JoyToken was trying to create a decentralized gambling platform, powered by its own JOY token.”

The United Kingdom offices for these organizations reportedly closed earlier this week. Additionally, the websites and Telegram channels associated with the startups have been shut down, and neither of their Twitter accounts have posted since last year.

The CEO of JoyToken, Andrew MacDonald‏, had previously called RepuX a “sister company” in an official twitter post at the beginning of 2018. The projects also shared two of the same advisors, Lee Murphy and Mateusz Mach, according to the ICO database ICObench.

The two organizations also initially secured community management from the same crypto-centric marketing solutions website, AmaZix, but were purportedly cut off from the platform when they refused to pay their promoters the amount agreed upon. In a forum announcement about the discontinued relationship, AmaZix said:

“The ICO teams have stated that because of the lower than expected results in their token sales they are no longer willing to pay out the originally allocated amount to the bounty participants.”

In a previous report by Cointelegraph, a study in 2018 by ICO advisory firm Statis Group indicated that over 80 percent of alleged ICOs in 2017 were scams. The largest scams identified were Pincoin ($660 million), Arisebank ($600 million) and Savedroid ($50 million).

However, it should be noted that as a percentage of money spent on ICOs as a whole, scams accounted for only 11% of funds invested ($1.34 billion out of $11.9 billion).

In more recent news, social media giant Facebook has recently loosened its previously strict policy on blockchain and crypto related ads, which was initially implemented partially in an attempt to protect users from ICO scams. In keeping with its original intent (despite the recent changes) ICO advertisements remain forbidden.