Startup Street: ‘I Am Sorry’ And Poof!...There Goes $2.8 Million
This week on Startup Street, a look at the most recent exit scam pulled off by a cryptocurrency exchange startup from South Korea; how India hopes that more incubators will bring out more startups from the country; and Ford goes for a Spin. Here’s what went on:
South Korean Cryptocurrency Startup’s Exit Scam
Pure Bit, a South Korean cryptocurrency startup, swindled over $2.8 million in ether after it raised money through a private sale of its digital tokens from investors.
“I am sorry” and “Thank You” were the last two messages sent on the crypto-exchange’s communication channel on instant messaging app Kakao. After that, the admin started kicking out users, those who had participated in its initial coin offering, and pulled the plug on its website.
Over 13,000 ether, the digital currency mostly used to raise money in initial coin offerings, were transferred from Pure Bit’s account to a private cryptocurrency wallet. While the receiver remains anonymous, the transaction is visible on the Ethereum blockhain.
Bitcoin was last year’s fad. This year all the hype was about initial coin offerings, touted as an alternative way of raising funds by giving investors digital tokens whose value is then linked to the company’s performance. However, with increased regulatory scrutiny and most initial coin offerings turning out to be fraudulent, the craze has now died down. South Korea itself has banned initial coin offerings.
Pure Bit, which was giving away Pure Coins, promised investors shares of the crypto-exchange’s revenue for trading and also discounted trading fees. It started raising money from Nov. 4 and then on Nov. 9 exited.
The development was originally reported by Blockchain ROK, a networking brokerage, and a user on Reddit, who claimed to have seen the events unfold. They were able to capture screenshots before everything was wiped out.
“They have gotten rid of every evidence,” another Reddit user commented. “Website hosted by fake name / out of Korea host / messenger / contacts were all fake too. Now their only hope is to keep on track with that ether and hope for the best.”
5,000 New Startups
India is hoping that by setting up world-class incubators it will be able to spur more startups from the country.
The Atal Innovation Mission, an initiative by the government think tank NITI Aayog, expects that India incubators that it plans to launch across the country over the next four years will yield about 5,000 new startups.
“We are setting up 100s of world class incubators in universities and institutions across the country,” R Ramanan, mission director, Atal Innovation Mission under NITI Aayog, said at an event in Hyderabad. “We have launched 101 incubators, of which 30 are operational and the rest will be operational by the end of next year.”
Each of these incubators will foster at least 25-30 startups every two years, Ramanan said, adding the incubators will receive a funding of Rs 10 crore to provide necessary support to the startups.
To spur innovation, the Atal Innovation Mission is also setting up ‘tinkering labs’ at schools. These labs help students get exposure to new-age technologies like robotics, internet of things, artificial intelligence and virtual reality, he said.
Ford Buys Electric Scooter-Sharing Startup
Ford Motor Co. acquired Spin as the automaker adds a scooter-sharing business to its sprawling array of transporation services.
“The acquisition of Spin is the latest strategic move by Ford in the mobility space, as the company builds a mobility portfolio to help customers get places more easily, more quickly and less expensively,” it said in a media statement. “Scooters allow cities to offer an equitable last mile solution to their residents, thanks to the relative affordability.”
Earlier this year, Ford had spun out Ford X, a separate division within its subsidiary Ford Smart Mobility, LLC, to build and acquire new transportation products and services. It piloted driverless cars and on-demand shuttles.
San Francisco-based Spin had put scooters on the city’s street earlier this year. In March, it said it had planned to launch services in 60 markets. It operates in nine cities and five college campuses. It claims to have facilitated over 1 million rides and is competing with bigger rivals like Bird and Lime.
Spin had last year raised $8 million in a Series A funding round, according to Crunchbase.