After raising more than $4.5 million in a series of initial coin offerings (ICO) the creators of the cryptocurrency startup LoopX have disappeared—along with the cash that investors provided—in what appears to be the latest exit scam to plague the cryptocurrency community.
Once a company with an active online presence, LoopX has entirely disappeared from the internet. The company’s website is no longer online and its entire social media footprint—including Facebook , Twitter , YouTube and Telegram —have been deleted.
LoopX pulled an exit scam after raising $4.5 million. Photo: David McBee/Pexels
The founders of LoopX promised their early backers they were building an investment platform that would utilize a proprietary trading algorithm. According to a cached version of the company’s website, it planned to offer the “most advanced loop trading software to date.”
According to the company, the promised trading platform would make use of an algorithm that produced “great profits continuously every month” during its “over half a year” of testing.
LoopX made a number of bold claims to investors, including the promise of “guaranteed profits every week.” The company also claimed that cryptocurrency markets were “projected to grow up to 10 times the size of now until the next year.” Essentially, the company made the promise of free money to its investors.
“Our software handles over 10,000 trades per second and calculates over 100 currencies at a time,” the LoopX website read. “Always looking for those opportunities to make profits bigger then [sic] 10 percent, which will payed [sic] out to our members on a weekly basis.”
The company’s white paper —which has also been scrubbed from the internet—offers similar language. “Finally the opportunity is here for the common investor to be part of a revolution and be finally free, financially free…Our top priority is to give you an opportunity to sit back, let us do the work and watch your money grow.”
Off the backs of those promises, the company raised about $4.5 million, including 276 Bitcoin and 2,446 Ethereum pledged by investors taking part in a series initial coin offerings (ICO) run by LoopX.
In an initial coin offering, an investor is given a token in exchange for an investment of cash or other popular cryptocurrency. The theory is that if the company is successful, the token will gain value over time and the investor will eventually be able to cash in with major returns.
In the case of LoopX, it appears the money put forth by investors is gone, along with the company itself in what appears to be a classic exit scam—a con job where a company accepts money for a service that it never intends on providing.
Other than over the top promises that would be difficult for any company to make good on, there were a number of indications that LoopX might be a scam. A Reddit user highlighted a number of red flags about the company last month shortly after the company launched its ICO, though the post gained little attention at the time.