Cryptocurrency Company That Scammed Investors Was Run by Fake People
Confido collected $374,000 in an ‘initial coin offering,’ then it collapsed. The founders’ supposed employers say they never heard of them.
“Confido” means “I trust” in Italian. It’s also the name of a cryptocurrency company that vanished without a trace this weekend, taking $374,000 of investors’ money with it.
Confido appears to have been a bogus operation, run by fictional characters who fabricated their resumes. It’s the latest cryptocurrency to cut and run with investors’ money—and loose laws on cryptocurrency sales mean Confido won’t be the last cryptocurrency to scam its way to riches.
Confido tokens are a cryptocurrency, like Bitcoin or Ethereum. Like a flood of upstart companies this year, Confido made its debut with a fundraising tactic called an initial coin offering, or ICO. For some cryptocurrency enthusiasts, an ICO is an opportunity to strike it rich by snapping up the next hot coin before its value increases.
ICOs are also a sweet deal for companies, who can rake in cash by selling tokens with no intrinsic value. That’s exactly what Confido did.
On its face, Confido looked like a trustworthy operation. Someone registered a website for Confido the last day of August, records show, and outfitted the site with friendly animated tutorial videos and biographies of four smiling men, whom Confido claimed were its employees.
Some prospective buyers were skeptical. “confido.io is not as good as 4chan thinks it is,” one forum poster wrote in October. Despite Confido only having 558 Twitter followers, the company regularly racked up hundreds of retweets, with no likes or comments: an indication that the company many have been buying retweets from bots, the writer speculated. “Because there is a shadow of a doubt, i cannot recommend joining their ico. you’ve been warned.”
But in early November, Confido started selling its tokens for less than a dollar each, leading to a rush of enthusiastic press.
“There is a potential for a 10x growth in token value after alpha launch. They have a good team,” one cryptocurrency blogger wrote a week after the launch. “Well worth a 6 month investment in my opinion.”
Investors shared the opinion and sank $374,000 into the cryptocurrency in two weeks. Then on Sunday, Confido announced that the project might have trouble.
“Right now, we are in a tight spot, as we are having legal trouble caused by a contract we signed,” a Medium post by Confido’s alleged founder Joost van Doorn read. “I can’t and won’t go into details, but [our legal advisor] was wrong. It is a problem.”
Confido’s price plummeted. But even then, not all investors gave up faith. Some even doubled down on their purchases, expecting the price to rise again. One buyer, who identified himself as “Jimmy” told The Daily Beast he bought over $350 worth of Confido when the price dropped 80 percent.
Jimmy said he normally doesn’t buy a coin unless he fully researches it beforehand, but “in this case greed got the better of me. Yet fortunately I still had the forethought to manage my risk, so I only out a very small portion. Still that’s money lost and my pride hurt.”
Investors wouldn’t get any more details of the alleged “legal trouble.” Hours after it went up, the post vanished from the internet, along with Confido’s website and all its social media accounts. All that was left of the company was a Reddit account, apparently belonging to a frazzled Confido support staffer named Chris.
“Look I have absolutely no idea what has happened here,” Chris posted to Reddit on Tuesday, when Confido buyers started demanding what had happened to the company and their $374,000. “I have been in contact with Joost for a number of weeks and this is completely out of character for him. Last I spoke to him he was extremely distressed, and was doing his best to rectify the situation. Today he was supposedly meeting with Max (The CTO) to discuss the situation at length.”
But Confido’s “legal troubles” might be a fabrication. The same goes with its cofounders “Joost” and “Max.”
Confido lists its CEO as Joost van Doorn on its “our team page.” His LinkedIn profile, which went dark at the same time as Confido’s web presence, describes him as a current specialist at German ecommerce company Zalando—but Zalando told The Daily Beast they have no records of a Joost van Doorn. After Confido announced its “legal” issues, a Facebook profile van Doorn had used went offline, along with his LinkedIn account. And while at least one real Joost van Doorn works in the tech industry, he’s a Dutch graduate student who built an app to help fellow Danes find gluten-free products.
Confido’s cofounder and chief technology officer, Max Kruger, has no social media and no résumé, despite allegedly being a talented young German developer. (His name might be based on a different Max Kruger, a tech developer in Berlin.)
The company’s full stack developer, Liam Bellum, has an active LinkedIn page, where he claims to have worked for McKinsey and Company. McKinsey has no record of him ever working there, they told The Daily Beast. The only available picture of him is an image of a man at an event hosted by the Association of Network Marketing professionals—an American group whose events would be a strange destination for a man who claims to be based in Berlin.
The company’s fourth employee, web developer Nick Spatz, claims to be a current Zalando employee, but Zalando says they’ve never heard of Spatz, either.
All this raises the question of who was actually behind Confido, but U.S. investigators might have limited power to find out.
Confido’s team claimed to be based in Berlin. But even within the U.S., laws on cryptocurrency scams are vague. While many crypto fans buy and trade the digital coins like stocks, legal experts are still uncertain whether cryptocurrencies can be policed under the same laws as securities. Despite investors getting burned on alleged cryptocurrency ponzi schemes like Bitpetite, which cut and run with investors’ money last month, the U.S. has only brought charges against one alleged cryptocurrency scam: a real estate company that allegedly sold nonexistent coins with gaudy names like “Diamond Reserve Club.”
Confido’s business partners also seem stumped on their legal options. TokenLot, a third-party site that sells Confido and other cryptocurrencies, says it’s contacted the FBI over Confido’s scheme, but that it’s just as confused as buyers.
“This morning we awoke to the unfortunate news that the team behind Confido has seemingly pulled an exit scam,” TokenLot wrote in a Monday statement. “ Unfortunately, we do not have much more information regarding the situation, outside of what has already been made public.”
Since the “exit scam,” Confido’s coins have collapsed into worthlessness. It’s a whiplash to some investors who were buying the coins up until the announcement of “legal troubles”.
Days before the collapse, Confido was still building to a fever pitch among fans when it announced that it would reserve millions of coins to sell later, an indication that Confido expected the coins’ value to skyrocket. Confido was in it for the long haul, investors speculated.“Love the way these guys roll,” one Redditor wrote of the announcement last week. On Monday, after Confido had collapsed into worthlessness, the writer replied to their previous comment.
“I take it back,” the user wrote.