Securities commissioners and trade experts have refused Australian blockchain startup Power Ledger a clean bill of ethical health after it emerged that the company paid rogue “bounty hunters” to shore up interest in its cryptocurrency. The project’s “powr” crypto has fallen 90 percent in value over the past year amidst bearish market conditions.
Also read: Russian Bitcoin Mining Granny is Bullish on Industry’s Future
Bounty Hunters Make False Claims
Spruikers, sponsored creators of glowing reviews, falsely claimed that Power Ledger, a peer-to-peer electricity-trading startup, had attracted the interest of Tesla founder Elon Musk, and was on a path to revolutionize the industry, in addition to other exaggerations.
According to local newspaper Financial Review, the Australian company rewarded spruikers with free allocations of its powr token, but denies responsibility for their embellishments. Power Ledger chairman Jemma Green maintains that spruikers posted the misleading reviews while operating outside of its control.
“Rewards were offered to community members to share our project with their own networks. The means by which they did so were outside of our control, and we made it clear that our core supporters who believed in the project and the future of renewable energy were the main audience for this program,”‘ Green was quoted as saying.
However, Australian Securities and Investments Commission (ASIC) head John Price said spruikers, which the company intends to maintain, should disclose that they are being rewarded by the entity. The commission this year set up a unit to monitor cryptocurrency investments.
READ Bitcoin Stabilizes above Important $6,000 Resistance as Bulls Manage to Fight Off Bears: Week in Review September 17
Trade experts also commented disapprovingly on the ethical dimensions of spruiking to boost initial coin offerings (ICOs), a practice that surged in popularity during 2017’s crowdfunding mania. Questions have since been asked over the failure of the majority of ICOs to evolve into successful projects with real adoption.
A partner at Deloitte Consulting specializing in technology, Peter Williams, raised ethical concerns over the provision of financial incentives, or bounties, for individuals to promote initial coin offerings, describing these as “classic market manipulation techniques.”
‘A Quarter of ICOs Are Scams’
ASIC Commissioner Price cautioned that his agency is focused on disclosure in initial coin offerings, estimating that a quarter of them may be scams. “Just because you call something an ICO, doesn’t mean you are unregulated,” he said.
Power Ledger maintains that it deployed spruikers, which it calls community advocates, not only to promote its virtual currency, but also to improve the reputation of the blockchain and cryptocurrency industry.
“Some of our bounty group were professional bounty hunters chasing tokens because it’s what they do,” Power Ledger posted a few weeks after the token sale. “Some were bots reporting an astounding 5,000 likes of our social media output in a single 24-hour period.”
Power Ledger will continue to pay spruikers to promote its currency, which peaked at $2.4 billion during the crypto boom. The company’s token is now trading about 20 percent below its issue price.
Aside from the controversy, Power Ledger successfully tested a blockchain-based solar power-trading project in the Australian coastal city of Fremantle earlier this month, enabling around 40 households to determine both the buying and selling price of renewable electricity generated on their rooftops. The trial has been described by Western Australia’s Minister for Finance, Energy and Aboriginal Affairs, Ben Wyatt, as a “world first.”
What do you think of the accusations laid against Power Ledger? Let us know in the comments section below.
Images courtesy of Shutterstock.
Need to calculate your bitcoin holdings? Check our tools section.