Introduction
As many of you know I like to invest in interesting ICOs. Recently I have been interested in distributed computing projects like Golem and Elastic.
A lot of people have been recommending that I invest in SONM which starts its ICO today so I went to check it out and find out more.
When I went to the Bitcointalk thread the first thing that struck me was that they seem to be making very grand claims - maybe it is just me but I generally think it is better to under-promise and over-deliver.
This was an immediate red flag as it just looks to be setting them up for problems. A competent team would not be doing this.
Further I am not familiar with the core team here - not unusual in cryptocurrency but I generally tend to be more careful (or at least try to be these days).
I noted that Max Kordek (LISK) is an adviser but it is not clear what this role entails so I'm not sure how much legitimacy this adds. The ETH core developers seem to be "advising" on any and every ICO and I doubt even they could tell you which ones they are a part of. If it all goes wrong I am not sure how Max would be able to help.
More positively the fact that they were using Sebastian Ju (a long trusted community member for Escrow) was a plus though - then I found some troubling comments that were posted by Sebastian earlier today:
No Escrow and Nobody Bothered to Tell Sebastian
Here is the text of what Sebastian Posted on Bitcointalk (link):
Hello everyone, SebastianJu here, official escrow of SONM. Normally I would have written something already days ago about how things will move and would have given more details. Unfortunately I lost contact with everyone from SONM some time ago. I requested to speak about and check the new contracts some time already and was told it will happen before the ICO.
Well, I often tried to get in contact the last days also, sent pm's on bitcointalk as well as email and dm's on slack to rebel.salesman, who normally is my contact, alexey and sergey. I was ignored except finally sergey answered me with the actual link to the ico contract on github. I checked and found it a bit strange to read nothing about anything pointing to the use of an escrow.
So I used a channel with sergey and rebel.salesman on slack and wanted things to clear. Time already was pretty far by that point because no one bothered to speak with me:
@channel it looks to me like there is no escrow involved anymore in the ico contract. I would appreciate to hear something else but the code leaves a different impression. Also you did not communicate with me at all about the ico even though I was told we would speak upfront about it. I tried to get in contact all the last days. Time is forward way too far now so it does not sound believable to happen. Also having too much work to do is not believable since the seamless work of the escrow part is fundamental for the safety of the ICO into both directions.
I do not know what happened. Maybe you would have wished to renegotiate the escrow fee. You did not try that at all. Maybe you wanted more safety... in that case I would have been able to bring in one or two other trustworthy escrows and create a 3 of 5 multisig. but no communication happened.
Guys, I will go to bed now. Please answer me in a proper way so that it looks like you take this serious. I hope this can be cleared earlier than 6 hours before the ICO starts.
I really hope you can tell me I interpreted everything wrongly.
Well, 2 hours earlier rebel.salesman answered me with this:
"Sebastian, hi, sorry for delayed response - lots of work to do at the moment. We are going to use ICO smart contract with multisignature as the escrow. Multisignature will be held by Sergey Ponomarev, Alexey Antonov, and SONM advisers.
I'm really sorry we didn't contact you earlier to discuss it. Lots of work is not an excuse, we should tell you about it before.
Anyway, it's pleasure to have business with you. Thank you for your help and your time during the preICO!"
So the ICO is NOT escrowed anymore. The invested funds will be held by the SONM team totally. I can not provide any safety from now on and I need to take my name from the safety sign of the SONM ICO. Just to make clear that I will have no access nor control about invested funds.
Not sure what to say about that behavior. I believe nobody would have contacted me without me pressuring that way. People would have invested believing I hold the funds in escrow. Which is not the case.
Nobody contacted me about negotiating something upfront, telling me about a change or tried changing something in the deal for the ICO.
So that's what I unfortunately only found out by putting pressure on the topic.
So again... this ICO is not escrowed anymore. Funds will be hold and controlled by SONM totally from the start.
So in summary it seems that rather than an escrow being used there will be a multi-signature contract instead BUT this will be controlled entirely by the team.
Nobody bothered to discus this with Sebastian or the community before the change of plans.
My Thoughts
This thing just seems full of red flags to me:
The hyperbolic claims sound unprofessional and suggest a lack of experience - that is the kind interpretation.
The treatment of Sebastian Ju is outrageous and smacks of incompetence and just downright lack of courtesy.
The sudden abandonment of Escrow makes no sense - a multi-signature wallet which is controlled entirely by the team requires you to entirely trust the team in the first place - so I don't see the point.
If this were a professional team they would have postponed the ICO and discussed these issues with the community before proceeding.
The failure to disclose the change in escrow arrangements to the community shows either deliberate dishonesty or(almost as bad) extreme negligence.
The behaviour of the team in this case does not make me confident enough to make an investment (- to put it lightly).
Conclusion
I am not saying that SONM is a scam but it seems the team is acting in a way that will undoubtably lead to the accusation. That just makes it a bad investment.
It is easy to get caught up in FOMO - I have often done that in the past but I am working on being more discerning when it comes to investing.
Now it is entirely possible that the team will end up producing a great product but right now it looks like it has the makings of a disaster and there are so many other ETH ICOs that we are spoilt for choice.
If the SONM team get their act together in the future I might buy some on exchanges but right now I will keep my ETH for other projects.
Right now I WILL NOT BE INVESTING.
I would love to hear what other people think.
Thank you for reading
I read their whitepaper and found it to be a loose collection of buzzwords with no structure. The description of their supposed global computer makes absolutely no sense. They even try to surf the wave of formal verification by claiming they verified the code using pi-calculus (like RChain does) but are so clueless about what pi-calculus actually is that they had to go copy/paste from a book a definition!
This sentence is literally ripped off from chapter 6.1 of Foundations of Security Analysis and Design: FOSAD 2006/2007 Turtorial Lectures
I haven't searched any further for plagiarism, but the style and content of the whitepaper is so inconsistent that I wouldn't be surprised at all if it was found to be a patchwork of content stolen from multiple difference sources.
This ICO smells very very fishy indeed.
(self upvoted to increase warning visibility)
All my alarms went off the moment i saw the WP. stay away indeed
Thanks for confirming my suspicions mate. To be honest I haven't seen this kind of ineptness on a development team's behalf since 2014.
It gave me an iffy feeling just reading what was on bitcoin talk and watching their promo video - it really did feel like they searched for the most popular "buzz" words and put them all together in a kind of word salad.
My gut was screaming "AVOID" to me!
People like me are not technically knowledgeable enough to always spot these things and I think these kind of things can get us into trouble if we get caught up in the ICO fever.
I didn't even know what Pi calculus is, I would have assumed it was some kind of pure maths thing for finding gradients on spheres!
I suspect they are relying on the fact that most people will see the buzzwords and will be too embarrassed to say they don't get it.
Thankfully the unprofessional behaviour with Sebastian basically underlined my suspicions and ruled me out.
As for the SONM team in general, I just hope it is incompetence and not outright deliberate dishonesty because it would be bad for the whole community if it was.
Not only would it tar ETH and ETH ICOs negatively but would also be bad for LISK due to Max Kordek being an adviser.
Yeah I agree entirely. There might be some nuggets of the idea that will live on but I think this might be money for learning a lesson. Just a bit of the point however - we need to learn the same lessons with these ICOs that the .com bubble learned.
Well I really hope there is not too many projects that tarnish the reputation of Ethereum. There will be some. I am even more worried about projects that make outlandish claims that Ethereum in its current form is unable to keep up with. There is a lot of growing room - this is experimental software at this point.
Some valuable discussion about the price and ICO irresponsibility in my latest post here: Step Back, Elephant in the Room: it's time to talk about the price.
https://steemit.com/ethereum/@kyle.anderson/step-back-elephant-in-the-room-it-s-time-to-talk-about-the-price
Thanks for your wise words mate. I will check the post out shortly.
With all of the hype lately, there were some things that I felt I needed to say and share. With almost everyone in the space so incredibly optimistic, there was some criticism and hard truths that needed to be expressed.
Definitely one of the more important things I have written in a while.
Thank you for this. The white paper was knocking my head but I had no idea that was plagiarism.
Wow. Glad I have been staying away from these ICOs... yuck
They scammed already your intuition is superb
Being new to the crypto currency world, it seems like there are a lot of opportunities to make the wrong choice. So, when there is a new ICO on the brink and not a whole lot of unbiased information out there about it , it can be even easier to take terrible risks. Thank you for this informative article, I appreciate the effort you made in researching this ICO first hand and sharing your experience with everyone.
There's a lot of risk in this space, but also a lot of opportunity. We can be happy it is less regulated, but it does put more pressure on the individual to pay its due diligence before throwing money on the table with some previously unknown party.
Yes.
You're welcome.
It is a huge problem the lack of unbiased information. It is even worse that the community as a whole is so optimistic that any criticism is often shuttered. It is great seeing people who have done some investigation share their concerns.
My latest post might be of interest regarding the ICO craze and price.
I was massively put off SONM because of the way they handled their DrugDiscovery@Home BOINC project: https://boinc.drugdiscoveryathome.com/forum_thread.php?id=2091
Thanks I wasn't aware of that!
Yeah, the DD@H project had a planned ethereum token too: http://www.drugdiscoveryathome.com/index.php/dd-token/
Gridcoin's DD@H thread: https://cryptocurrencytalk.com/topic/51590-drugdiscoveryhome/?page=1
OK thanks.
Andrew Voronkov who was cofounder of drug and sonm left the team
Very interesting.. It's a shame, but given the recent track record I have little sympathy.
If this is all true, from a business perspective, this behaviour is truly unprofessional. I hope for all investors this works out as seems like some craziness and lack of planning might be their downfall.
Well the ICO hasn't started yet.
Thanks cryptofiend. What other ICO that you think is kind of scammy?
Depends on what you mean by scammy. I think some ICOs have been executed poorly but I don't think they are actual scams as such. Examples would be the Gnosis and BAT ICOs which sold out ridiculously fast with a small distribution. That's not to say that there aren't genuinely fraudulent ICOs I just tend not to hear about them these days.
Followed-upvoted-resteemed. This is why I love Steemit and what upvotes are for. Thank you for your time and research!!
You're welcome:)
I personally dont think its a scam but I am very hesitant about investing due to the teams behaviour. Dropping escrows just before the ICO without telling anyone is very unprofessional. Also the complete lack of communications from the team about the ICO for sevaral days now.
Its a large project and at the moment it doesnt look like they can handle it.
Yes - probably not a scam but it is very unprofessional and doesn't bode well for their abilities to develop a viable product.
The 117k ETH cap aslo seems very high. It should at least warrant an explanation. Many ICO usually takes around $ 10 million unless there is some special need for the funds.
Good point - in fact I heard someone else say something similar - it just looks greedy. How can a startup even spend that much money?
I was actually thinking about buying into SONM, so thank you for this. Seriously.
You're welcome. Me too but there will be plenty of other ICOs on ETH.
Yeah, there seem to be more ICOs, than one could read sales pitches, let alone whitepapers.
And quite frankly, if that is the team giving their honest best, they're more likely to drive that car against the wall than cross the finish as a winner.
Well, the project certainly has its merits, so I wish them good luck nonetheless. I'll just do the wishing from a distance.
Lol my thoughts exactly:)
👍 Nice upvoted
Thank you:)
Thanks for the info, what do you think of EOS?
I'm still making my mind up. I like the concept not so sure about how well the way they will raise funds is going to work. At least they are trying to innovate though.
Damn! I wish I'd seen this before I'd bought some :(
Great post! Thanks for sharing your view!
You're welcome:)
Thanks for the heads up man! I am really starting to see the fallout that all these startups could lead to. It can possibly push back the entire crypto market due to a lack of trust.
What do you think ?
I agree - it only takes one big high profile failure to set back the ecosystem for months or longer.
Since you are way more experienced than I am, Do you see any end to this?
Not really - people are attracted to money.
Well then I might have to get ready my scuba diving because I might have to ride a blue whale to profit from this.
Before I only rode Orcas
good info
Thanks!
No problem
Your post was mentioned in my hit parade in the following categories:Congratulations @thecryptofiend!
@thecryptofiend, thanks for your honest analysis. I indicated on my posts the scams that have taken over the crypto business and named some involved. People just have to do due dilligence before investing and not allow greed to take over...which certainly will result in loss. Good post
Thank you:)
welcome
meep
We will reach a point where lot of people loose tons of money and then regulation steps in..Waiting to happen. in storage itself we got
strorj,maidsafe,siacoin among that only storj has a live product..so i trust them more in that space..may be I am wrong
similarly among network computing golem elastic now sonm and may be more.So far I have seen only early working version of Golem ...its getting too crowded and the prospect of getting investor money with just a white paper is appealing to a lot.This will not end good
I think there is room for multiple products just like the non blockchain world. The problem is that cryptocurrency is like the Wild West and it seems that it is easy for people to be relieved of all rationality when large amounts of money start getting involved.
Very interesting... thanks for your input. :)
follow me
You're welcome:)
Thanks for that. And the cute dog.
You're welcome:)
Quite obvious not to invest in SONM.Thanks for the news @thecryptofiend!
You're welcome:)
Well reasoned investigation. I totally agree with what you've said. This looks like a particularly high-risk option at the moment. I wouldn't want to jump in on it.
Thanks - well lucky I went on the bitcointalk thread first.
Thanks for sharing, the ICO you have to be extremely carefull!
Yes I agree.
Anyone can create a Cryptocurrency these days and with the average IQ between 90-110 it is so easy to fool and manipulate.
If you sound convincing you can sell thousands of people a product they know nothing about. If you can provide the appearance of evidence, millions.
ico scams are the hot new investment
Certainly seems like it and money makes us all even more stupid than we normally are!
good info - i am following you now
Thank you!
I only started trading Cryptos this year, (late to the game, I can't imagine having bought BTC for $3) and it can be overwhelming to join a world that has so many innovative tech coins to invest in. However, with analyses from people like you help clear doubts. Its great to hear other peoples perspective on what they think coins/teams/developers are going to achieve.
I think over time a lot of coins will fold, for now its about finding the coins that can do well at the current moment and hold those who I think have a real future like Ethereum, Golem, Steem etc.
Yes I wish I got in at $3! Steemit has become one of my main sources for ICOs and general crypto news.
Im not keen on ICOs its just adding unneccesary risk to an already risky space.
You can buy into a distributed supercomputer in the form of Gridcoin, its been running for years and is proved to be secure, bearing this in mind why risk your funds on SONM?
True but I think there is space for multiple different approaches and competition just like the non-blockchain world.
Sure I guess my point is too well hidden, I dont have a problem with competing projects and if you need to raise funds to do something thats cool. But if its already been done successfully with out an ICO...
Yes I get what you are saying:)
Nice piece, check out my first two pieces if you're keen. One on anarchy being nature, the other on understanding value and the blockchain. Cheers.
https://steemit.com/introduceyourself/@anarchyisnature/1-heyyyy-everybody-i-am-anarchy-you-are-nature-and-nature-is-anarchy https://steemit.com/bitcoin/@anarchyisnature/2-the-economics-of-crypto-currency-understanding-value-and-the-blockchain
Will do. Just be careful in sharing your links like this because some people may flag you.
Thanks for the advice.
You're welcome:)
Great research! I also found out about them and had my own doubts as well. They also have a pretty large team, especially many advisors, and I really wonder why they need so many people. I could not find anything about what differentiates them from the rest in this area, e.g. Golem.
Yes - huge team (I haven't heard of before), lots of money (extravagantly so) and all the other issues don't inspire confidence.
Yep exactly, I'm going to sit this one out for sure. So many other options, prefer to limit my risks in this violently market xD
Yes it makes sense.
Thank you very much for sharing this valuable information and your thoughts and without any doubt your experience on the subject, so that you can be as much as one, make no mistake in investing our expensive money.
I wish you a beautiful day
Thank you:)
Being very new in the world of cryptocurrency (I have a few alt coins) but wanting to know more...one of the reasons I came to steemit...I welcome posts like this.
I have learned quite a bit since joining but definitely lack any experience, so thanks for advice and great post.
You're welcome!
Too many red flags there indeed, sounds not very trust worthy, never heard of them before anyway. Hope no one here is losing too much.
Yes - well hopefully people will not invest given the risks.
I was really ready to invest some ETH on this (even more with today's dip) as I was also interested in their platform for the development of solutions, but right now there is too much fear about any of these ICOs being capable of deliver their promises.
Taking the faith necessary to believe that they will deliver their big plans and the concern about trust that you just highlighted I'm deciding to don't buy anything today.
Thanks for your information.
Me too. You're welcome.
SOMN looked interesting, but you bring up really valid points about unprofessional and suspicious behavior. And, as you mentioned, there are plenty of ICO opportunities available, so why tread on dangerous ground?
Yes exactly.
Have you done any posts on Crypviser's ICO?
No haven't heard of it. What is it?
Their goal is to bring encrypted messaging, chat, VoiP to the blockchain. According to their site the escrow is being handled by a couple guys from BitShares.
I've gotta do more research. Love to get your take on them. :)-~
Here's the link: https://ico.crypviser.net/
Cool thanks will take a look when I have a moment.
Rock on and Steem on!
really happy to read you and improve my knowledge. thanks
You're welcome!
Now how is a beginner helped out, if this is really true? thanks for the notice
You're welcome!
SONM wasn't on my radar, but if I came across it today without reading your post first that could have been trouble.
Thanks for the warning @thecryptofiend!
You're welcome!
I think gold-backed cryptos are the next big thing - thinking of investing in an ICO but not sure SONM is for me. Awesome writeup cryptofiend.
I think there already are some. GOLOS also has some kind of gold backing if I remember right.
OneGram (out of Dubai) and ZenGold are 2 that I've heard of, and others are also beginning to be announced. They're on my radar ;)
Wow! You have a great post there! Keep it up!
I have followed your account!
Check & upvote My Introduce
MyselfPost!Thank you.
You're welcome!
A huge red flag for me was that they advertised the absolute bollocks out of it. All over social media advertisements were placed, which I haven't seen too often in more successful coins and ICOs. These guys just seem super shady, and now without Escrow.... Basically don't lose your money, wait until the tech reveal to invest.
It certainly seems that they are acting in a way that looks shady. If you are going to promote something as if is a huge project you better be very professional otherwise it will look iffy.
Exactly man! One thing is for certain, I'd never invest in anything that is not 100% trustworthy (Financially audited or has formal (government) financial accreditation) without Escrow, because you might as well send your money to the Nigerian email princes.
:)
Thanks for the headsup dude! I've been looking out for new projects! Great to see this post, saved me a lot of time having to my own research as I stumbled into this ICO myself tonight! :)
NP mate:)
I just dont get it with all these coins coming out. Some are centralized and some are decentralized. I personally am not investing in any new coin without proper research! Thanks for outlining this :)
You're welcome:)
Hey @thecryptofiend!
I love the way you give advice but still place the caveat with those who wish to proceed. I'm totally with you, buddy. What with Sebastian and no escrow (especially), these are crazy warning signs which should trigger alarm bells for most. But with so many new to crypto now, it's all to easy to be duped by false promises and bold claims.
And given how easy it is for unscrupulous individuals to make off with loads of our money completely anonymously means research is paramount.
Again, ever helpful to our great community and always looking out for our best interests.
Bless you, @thecryptofiend. All the best, my bro...
Thanks mate you are very kind:)
Great post i feel like as a community we need to be more critical of ico's in general and call bovine excrement when it is bovine excrement
Lol yes!
If they don't have strong team then investing in them doesn't make much sense. How are they different than golem? And a bit behind golem?
No it doesn't make sense.
hhhmmm this is really crazy planning, hope all works out best..
Me too.
Thx for sharing
You're welcome:)
Thanks for sharing, I will take more time to look into it. upvoted & Resteem
Thanks!
My spidey sense is tingling. If anyone has anything in it get out of it ASAP.
It just looks unprofessional even if it is not an intentional scam. It seems people are so keen to invest in ICOs that they lose their rational thought and people are capitalising on it.
It doesn't help they are Russian, don't know who it is. They could even be officials. If the government likes your business over there they take it.
Yes but I don't think it is worth taking the risk with so many other ICOs we are spoiled for choice.
Wholeheartedly agree. With so many it feels like paralysis by analysis trying to pick one to invest in. Awesome problem to have.
Yes!
Oh please, it's not just the russians. National security is always a good sell...
Thank