Are Verge’s cryptocurrency developers running an exit scam?

Posted: 28 March 2018 3:59 pm

Strange things are afoot with the Verge cryptocurrency.

Verge (XVG) isn't a small coin. With a market cap in the $600 million range at the time of writing, it's relatively well known as one of the larger coins around, despite some doubts about whether it's technically able to deliver the features it promises. This is probably why its latest antics have been attracting so much attention.

In an unprecedented move, Verge developers took the bold step of crowdfunding an announcement, declaring that they would reveal the identity of a huge anonymous partner they have waiting in the wings but only if their supporters sent them 75 million XVG, which is worth over US$3 million all up. In an even bolder move, their supporters actually took them up on this offer and dutifully sent over the funds.

With the money raised, the Verge community assembled to receive the good news. The announcements then came dribbling in piece by piece.

The first announcement was that they wanted to deliver an announcement by video in order to really do it justice. The second announcement was that the video would be coming out at midnight. The video itself then announced that the real announcement would be coming a few weeks later on 16 April.

Apropos of nothing, this kind of staggering and delaying action is one of the classic hallmarks of a scam, typically initiated to buy time and rake in a bit more money at the last minute before a project shuts down. It's usually accompanied by some kind of excuse that doesn't really hold together if you think about it.

Verge developers explained the delay by saying:

"Our crowdfund ended after normal business hours. i was able to reach the partner anyway, (who probably didn't think we could raise the funding) and get a verification that we will go ahead with the partnership. Since they did not have a press release ready at 9pm EST, of course it only made sense to announce when they are ready with it. When we announce on the 16th, they will already have Verge integrated and will be rolling out a nice press release."

One might wonder why exactly the developers were raising money and making promises before they had even verified that the partnership would be going ahead. One might also wonder what kind of legitimate partnership is contingent on the crowdfunding of a few million dollars in crypto, or what kind of announcement is contingent on the same.

The Verge community is divided between those who are excited for the announcement and eagerly speculating on who the mystery partner is, and those who are either getting out entirely or approaching with more caution.

The entire situation is extremely unusual. It's possible that Verge actually does have an impossibly huge anonymous partner that for some reason was only willing to confirm the partnership if the Verge community sent the developers 75 million XVG.

It's also possible that the developers are ready to give up on the project and want to make a nice payday with enough time to sell all their holdings before it tanks. If this happens, it might be the cryptocurrency world's highest-profile project abandonment to date.

The truth will probably emerge on 16 April.

Verge is no stranger to controversy. It only catapulted into the crypto mainstream after John McAfee started evangelising for it on Twitter. Shortly afterwards, he walked back his endorsement, and messages emerged that purported to show McAfee demanding payment for his unprompted service, and then threatening to publicly badmouth the project if he's not paid.

Verge prices rose in steps over the last week as the community rallied to raise the money, but it dropped over the last 24 hours after the hotly anticipated announcement failed to live up to its $3 million price tag.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VEN, XLM, BTC and NANO.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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