Major accounting discrepancies have been found in the initial funds raised by the Substratum ICO.
Brian Li, whose blockchain forensics uncovered the missing money, has found that 2.5 BTC, 702 BCH, 1,142 ETH, and 35 LTC have not been accounted for between the amount of crypto the project claimed to have raised from their initial ICO and balances from their publicly viewable wallets.
The missing funds are currently valued at over $400,000, but during the bull run of late 2017, the value was well into the millions of dollars.
What is the project about?
Substratum is labelled as an “open-source network that allows anyone to allocate spare computing resources to make the internet a free and fair place for the entire world.”
It has been built to work on the Ethereum blockchain, with its token currently trading as an ERC-20 token.
At the time of writing, Substratum has a market cap of just over $20 million. This is more than the $13.8 million raised in their September 2017 ICO. In that ICO, it’s also worth noting that the project only raised a third of the $45 million they were looking to raise.
Just a year ago (during the ICO bull market), the project managed to momentarily achieve a market cap above $650 million. It has been a long way down since for the project however, which currently trades at just 3% of its all-time high.
Community denying the allegations
Some community members have responded to allegations about the missing funds. One of the main defences given is that the amount Substratum claims to have raised only refers to the amount raised during the explicit ICO period (and that any funds which entered the ICO wallets outside of that time period are not part of the ICO funds).
In a strange move, the project’s CEO, Justin Tabb, was recently caught on video openly admitting to being a pump and dumper in front of a live audience.
Why would a crypto CEO openly admit to being a pump and dumper in front of a live audience on video, and then act surprised when people start talking about suspicious volume/candlestick patterns that deviate from normal trading on his own token? #Substratum #SUB pic.twitter.com/fHXy5pTvf7
— Brian Li (@DecryptoBL) January 3, 2019
Brian Li also called out Justin on Twitter, asking: “Why was the CEO of Substratum suddenly able to afford a $400,000 home and a bunch of new toys in the first week of October 2017?”
We have seen many recent crackdowns on ICO projects over the last few months, so it will be interesting to see if any regulatory enforcement agencies may want to take a closer look at potential accounting discrepancies like this one.