Crowdfunding has become incredibly popular over the years, with sites like Indiegogo and Kickstarter helping inventors raise the money they need to build new products. However, a few inventors have gotten rather greedy and have taken the money and spent it on personal items – and in some cases, even Bitcoin! One crowd funder but the name of Douglas Monahan misappropriated funds totaling more than $800,000 to pay off credit card debts and buy Bitcoin. The U.S. Federal Trade Commission (FTC) has filed a lawsuit against Monahan to force him to repay investors.
The iBackPack or Bitcoin?
Investors who threw thousands of dollars into Monahan’s product were allegedly supporting him in building the iBackPack. It was supposed to be a high-tech backpack full of electrical gadgets, such as a mobile phone charging station, built-in Wi-Fi 16 USB ports, a car and wall charger as well as being bulletproof. However, the 4,032 backers who donated $720,910 were in fact fueling Monahan’s Bitcoin habit. A number of consumers reached out to Monahan to demand their money back after he failed to deliver the iBackPack, but Monahan allegedly became aggressive and threatened to sue them for libel. The official FTC report states: “Some consumers have also complained that Defendant Monahan sent threats to try to silence their criticism, including by telling one consumer that he knew where the consumer lived and had other personal information about the consumer, and by threatening to sue another consumer and his employer for libel and slander.”
FTC Clamping Down on Scammers
Sadly, it seems as if scammers know no bounds and are trying to take as many people for a ride as possible. The Commodity Futures Trading Commission (CFTC) slapped a crypto trader by the name of Joseph Kim with a whopping $.1 million fine and 15-months behind bars for stealing client money to trade cryptos. Kim defrauded his employer out of $600,000 – money that he took directly from client accounts – and deposited it in his own crypto accounts. From there, he traded it and lost a large portion to bad decisions.
Sadly, it’s scammers like Monahan that gives epic products like the iBackPack and crowdfunding a bad name. Crows funding is a huge part of the crypto industry, and while these funding rounds are commonly known as ICOs or IEOs, they are integral to the survival of many projects. If scammers keep taking advantage of good willed investors, these funding rounds will begin to dry up as people lose faith.