ICO-Funded Project Sparkster Converts $22M in Ether to USDC After 3 Years, No Product

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The conversion in recent days of nearly $22 million of ether into the stablecoin USD coin (USDC) by the seemingly dormant blockchain project Sparkster has got some observers crying foul and calling on the funds to be blacklisted.

Bizarre narratives and ideas claiming world-changing potential peaked at the height of the initial coin offering (ICO) boom in early 2018. While some projects went on to build legitimate products and ecosystems, others have yet to deliver.

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

The wallets holding the proceeds from the ICO suddenly became active this weekend, however, and by Monday they were sitting on over $22 million of the stablecoin USDC. The move is seen as unusual and is raising suspicions among some community members – especially in the absence of a public explanation from the Sparkster team.

What happened in 2018?

Project documents show that 30% of the tokens offered by Sparkster were supposed to be distributed between the founding team and initial investors. The funds were to be used to build out a team and to cover legal fees and marketing.

But little happened in the months afterward. No product arrived, 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 claims 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 sites and found they were walk-throughs for users instead of a functioning tool.

Sparkster’s GitHub repository shows the last activity was three years ago in March 2019. Industry developers, however, say the code has been copied from another application.

Funds on the move

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

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

Another wallet, tagged “Sparkster: Wallet 4,” received 3,002 ETH some 1,371 days ago. Three days ago, however, it converted the full amount over three transactions to more than 6 million USDC.

Data from other wallets shows similar ether amounts were converted to USDC over the weekend. All were last active over three years ago.

Sparkster had not responded to requests for comment via a Twitter direct message by publication time.

Meanwhile, community members tried to bring the USDC holdings to issuer Circle’s attention on Monday, asking the team to blacklist the funds.