ICO-funded project Sparkster converts $22M in Ether to USDC after 3 years, without product

ICO-funded project Sparkster converts $22M in Ether to USDC after 3 years, without product

Sparkster promised investors a "no-code" software development platform, raising $30 million from investors in 2018.

The conversion of nearly $22 million worth of Ether into the stablecoin USD Coin (USDC) by the seemingly dormant blockchain project Sparkster in recent days has some observers calling for the funds to be blacklisted.

Bizarre narratives and ideas that have the potential to change the world peaked at the height of the ICO boom in early 2018. While some projects have built legitimate products and ecosystems after that, others have yet to deliver.

Sparkster appears to belong to the latter camp. The project raised more than $30 million in an ICO in July 2018 for what it described as a "no-code" software creation platform. The last tweet from the project's Twitter account was from 2021 - a link to a demonstration of a supposedly upcoming product. Nothing has been communicated from that account since.

However, the wallets with the proceeds from the ICO suddenly became active this weekend, and by Monday they were sitting on over $22 million of the USDC stablecoin. The move is seen as unusual and is raising suspicion among some community members - especially since the Sparkster team has not issued a public statement.

What happened in 2018?

Project documents show that 30% of the tokens offered by Sparkster were to be distributed between the founding team and the first investors. The funds were to be used to build a team, as well as for legal fees and marketing.

But little happened in the months that followed. No product was launched, and the project's SPRK tokens were apparently never distributed to investors, prompting the community to threaten the team with legal action in 2019. Sparkster denied all allegations of wrongdoing at the time.

The project's Telegram community channel does not allow members to send messages or interact. A related Telegram channel posted web links to product demonstrations in October 2021 and February 2022. CoinDesk reviewed the pages and determined that they were walkthroughs for users and not a working tool.

Sparkster's GitHub repository shows that the last activity was three years ago, in March 2019. However, industry developers say the code was copied from another application.

Funds on the rise.

Blockchain data now apparently shows that more than $22 million worth of Ether (ETH) was converted to USDC over the weekend from several Sparkster wallets that were last active more than three years ago.

Pseudonymous blockchain analyst zachxbt first reported the findings. One of the wallets, labeled "Sparkster: Wallet 5" on blockchain explorer Etherscan, saw 2,599 ETH converted to USDC. The wallet was last active 1,371 days ago, in August 2018.

Another wallet named "Sparkster: wallet 4", received 3,002 ETH 1,371 days ago. However, three days ago, it converted the entire amount into over 6 million USDC over three transactions.

Data from other wallets show that similar amounts of Ether were converted to USDC over the weekend. All were last active over three years ago.

Sparkster had not responded to a request for comment via Twitter direct message by press time.

Meanwhile, community members tried to alert issuer Circle to the USDC holdings on Monday, asking the team to blacklist the funds.