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Underscoring bitcoin’s maturation, the currency set new price records this week as the value of a single coin crossed the $2,000 threshold. Since bitcoin was announced in 2009, and certainly since I first wrote about it in 2013, the ecosystem of cryptocurrencies has exploded.

Cryptocurrencies have expanded since the days bitcoin shared some of the media’s spotlight with litecoin and the silly-by-design dogecoin. It was a time when Mt. Gox ruled, cupcake shops could become media darlings by accepting the digital currency and pizza was a critical bitcoin-pricing metric.

Now, there are dozens of cryptocurrencies worth eight figures, and the birth pace of new entrants is accelerating.

In that particular milieu of freshly launched coins is a newly famous transaction type we need to understand called the “Initial Coin Offering” or ICO. An ICO is akin to an IPO, but in temporal reverse (sort of). Although confusing, it has recently acquired prominence as a favored way to launch a new cryptocurrency.

But as is typical of nascent cryptoproducts, there are legal questions and unethical players in the mix. So let’s explore what an ICO is in the current cryptocurrency market.

basics

An ICO is a fundraising tool that trades future cryptocoins in exchange for cryptocurrencies of immediate, liquid value. You give the ICO bitcoin or ethereum, and you get some of Billy’s New Super Great Coin or the infamous CrunchCoin.

The Financial Times calls ICOs “unregulated issuances of cryptocoins where investors can raise money in bitcoin or other [cryptocurrencies],” which is accurate, especially if you underline the word “unregulated.” We’ll get to that in a moment.

Sticking close to the older financial publications, The Economist also took a look at the financing mechanism, describing what you buy in an ICO in the following fashion:

ICO “coins” are essentially digital coupons, tokens issued on an indelible distributed ledger, or blockchain, of the kind that underpins bitcoin, a crypto-currency. That means they can easily be traded, although unlike shares they do not confer ownership rights. […] Investors hope that successful projects will cause tokens’ value to rise.

The referenced value increase is critical to understanding the appeal of ICOs. These are not transactions of love. They are investments made in hopes of quick, strong returns.

Notably, not all ICOs are for cryptos that will maintain their own blockchain. According to the crypto-focused Smith + Crown research group, some ICOs are actually “launching ‘meta-tokens’ built on Ethereum, Bitcoin, NXT or others.”

After all, why not.

So ICOs can be coins on top of coins funded by the transfer of other cryptos to accounts in the hunt for what’s next. That might sound crazy, but it’s hot times in the crypto world.

And that heat is keeping ICOs bubbling. The same Economist piece, published in April of 2017, notes: “[n]early $250m has already been invested in [ICOs], of which $107m alone has flowed in this year,” a metric that it attributes to the aforementioned Smith + Crown.

That is a lot of money, making ICOs large in terms of their sheer dollar-scale. It’s therefore not hard to understand why more traditional business publications are paying attention. Following the money is their jam.

In short: ICOs are the new funding slingshot by which nascent cryptos are flung into the world.

Thieves, lies and laws

As with any boom, there are bad actors to be found in the land of ICOs. Given bitcoin and the larger cryptocurrency world’s deep tradition of enduring bad behavior, it is not a surprise that ICOs are attracting humans of base intent.

ICO fraud and skullduggery is common enough that a quick search yields heart-melting headlines like “Ver Backed Qtum Founder Ran Previous ICO Scam,”  “To everyone that bought into the Matchpool ICO, it looks like it was maybe a scam…,” and “A Digital Currency Scam is Misusing the Rothschild Family Name.” All of the articles are from this year to date.

In the world of ICOs, fraud is never hard to find. Add in regular sums of incompetence that any new venture could fall prey to, and ICOs feel a bit Old West.

Laws

But what about regulation, you reasonably protest. Surely that must exist to protect consumers?

Returning to Smith + Crown, skirting usual rules concerning fundraising is nearly normal in the realm of ICOs — at least partially explaining why guard rails in crypto offerings may remain a homegrown affair:

Most ICOs today are marketed as ‘software presale tokens’ akin to giving early access to an online game to early supporters. In order to try to avoid legal requirements that come with any form of a security sale, many ICOs today use language such as ‘crowdsale’ or ‘donation’ instead of ICOs.

So regulation is out of the mix for now.

There is an argument to be made that a dearth of regulatory oversight is actually good, as it allows the ICO market to iterate and innovate quickly. It is a reasonable(ish) argument and likely technically correct, but that doesn’t mitigate the potential for unsophisticated investors to be preyed upon.

Caveat emptor and moral hazard are fine arguments in favor of no rules regarding ICOs and cryptos, but if the market wants to keep growing, it will need to do more to attract consistently larger pools of capital.

Bubble me this

Is there a chance that ICOs will slow? Of course, but the forces behind them run a bit deeper than we might have first guessed.

CryptoHustle makes the related point in a recent article that “ICO mania is likely due to early Ethereum adopters making serious returns after the last bull run.” Etherum’s run has certainly been staggering. If it is fueling the ICO craze, we could be in for a long cycle.

Regardless, the point doesn’t mean that cryptomarkets are as they should be. That ICOs would eventually get ahead of themselves and bubble like so many young technology niches was predicted at least since last October. How long the good times will last isn’t obvious. But the correction will come, as always, and when it does, we’ll see which cryptos have a real shot.

Take this away

The cryptocurrency market is hot once again. And while it continues to set new records, a host of altcoins will demand its slice of the market.

Should you buy into an ICO? Only if you have a massive appetite for risk, zero fear of losing your capital and are willing to take a flying chance on an idea that could flop.

Then again, crowdfunding has similar risks and seems perfectly healthy. Your call.

Nearly $4 billion in funding has now been raised through initial coin offerings (ICOs), according to a handy ICO tracker at CoinDesk.

In news articles, you might have seen ICOs described in terms of traditional IPOs. Many define an ICO as a “digital IPO” or, as Bloomberg wrote in October, “like an ICO but with digital coins.”

That’s not correct.

In an ICO or “token sale,” an internet startup sells you digital tokens it has created, for later use in their ecosystem. Investors typically buy the new token with existing cryptocurrencies like ether or bitcoin, or with US dollars. There is no guarantee the token you’re buying will accrue value, nor even a guarantee that the product or network the company is planning will ever launch.

Here’s the key difference from an IPO: If you buy tokens in an ICO, you get no equity in the company. You have no ownership stake, no voting rights, nothing like the privileges you get from being a shareholder in a publicly traded company. The tokens are not akin to shares. They may hypothetically rise in value based on the success of the company, but they may not, even if the company is successful. And the company owes you no real commitment.

Think of an ICO as buying chips for use at a casino that hasn’t opened yet. (In fact, for one example, here’s a company that did an ICO for that very purpose, an online betting platform.)

In ICOs, new internet companies see a fast way to raise capital, and investors see an instant entry into cryptocurrency. But investor beware: ICOs are extremely risky, and many are likely fraudulent.

Most of the companies doing token sales have not yet launched a product, just put out a white paper on what they intend to launch. And they run targeted ads on social media often designed to attract newbies with scant information and promises of big returns. (See the ad below, which a Reddit user called the “worst ICO ad ever.”)

CoinList, recently spun out of AngelList, is a services provider for ICOs that says it vets planned ICOs carefully and only partners with those that it believes are legitimate and above-board. The first ICO that CoinList listed was for Filecoin, which raised more than $250 million in August, setting a new ICO record. The second-biggest token sale was Tezos, which raised more than $230 million.

“If the company is doing it as a way to raise non-diluted financing because they see it as the only opportunity, that’s maybe not the best fit,” says CoinList CEO Andy Bromberg.

Indeed, many of the companies doing ICOs are doing an ICO for that reason: to get money quickly. It isn’t very similar at all to a company debuting on the public market by listing its stock ticker on the NYSE or Nasdaq.

Just this month, SEC Chairman Jay Clayton issued a warning to the public about investing in ICOs. “There is substantially less investor protection than in our traditional securities markets,” he said. And Stefan Thomas, CTO of Ripple, predicts the death of the ICO in 2018.

As the influential venture capitalist Tim Draper said this year at Web Summit conference, “Safety is not in the ICO vocabulary. If you’re investing in ICOs, you better understand the entire cycle of the coin, the token. Is there a real use for it, is there a reason to buy it?”

Joseph Lubin, a cofounder of Ethereum, said on the same panel, “People who are interested in buying a utility token should be buying that utility token for the usage of the platform that it enables.”

And above all else, you should not go into one thinking it is like an IPO.

—

Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.

Read more:

Everything you need to know about initial coin offerings

Tim Draper: ‘Safety is not in the ICO vocabulary’

CoinList wants to bring safety to ICOs

Why bitcoin matters

Japan is poised to become the leading bitcoin market

Why China’s central bank fears bitcoin

Why Ethereum is the hottest new thing in digital currency

More than 75 banks are now on Ripple’s blockchain network

Expect more blockchain hype in 2017

If there's been one word on the lips of everyone in finance, it's cryptocurrency. If you've been kicking yourself for not getting in on the ground floor of blockbuster coins like Bitcoin and Ethereum, you might want to consider looking into investing in an initial coin offering (ICO). Be warned, however: ICOs are highly risky even under the best of circumstances and have a high potential for scams.

So What Exactly Is an ICO, Anyway?

Imagine this: You're a Silicon Valley startup with a great idea for a new cryptocurrency system. Perhaps you want to streamline the Parent/Babysitter payment system so that it can be digital and encrypted. What a great idea! Let's call it BabyCoin.

The only problem is you need people to give you money so you can actually make the currency. Now, you could go to a bank or try getting venture capitalist investors, but what if you could raise money without having to give up any of your ownership of the company? Enter ICO.

Here's how it works. You create a document essentially detailing exactly how the system would work (usually called a white paper), make a pretty website, and explain why it's a great idea that could be very useful. Then, you ask for people to send you money (usually Bitcoin or Ether, but you can also take fiat) and in return, you send them back some BabyCoin. They hope that BabyCoin will get used a lot and be in high circulation, which would raise the value of the currency. 

It's important to note that, unlike an initial public offering (IPO), investing in an ICO won't result in you having an ownership stake of the company you're giving money to. You're gambling that the currently worthless currency you pay for now will increase in worth later and make you money.

So Who Can Launch an ICO?

Anyone can launch an ICO. Currently, there's very little regulation on ICOs in America, meaning as long as you can get the tech set up you're free to try and get your currency funded. Right now cryptocurrency as a whole is kind of like the wild west; there's gold in the hills and relatively little law to speak of. This can work in your favor or it can lead to getting swindled. Of all avenues of funding, an ICO is probably one of the easiest to set up as a scam. Since there's no regulation there's nothing stopping someone from doing all the work to make you believe they have a great idea, and then absconding with the money.

This means that if you're really set on getting in on that new ICO that your friend Aiden from work told you about, make sure you do your homework. The first thing to do is make sure that the people putting up the ICO are real and accountable. In the Internet age it's beyond easy to find a stock photo and put together a convincing website, so going the extra mile is important.

Some things to look for include what history the product's leads have with crypto or blockchain. If it looks as if they don't have anyone with relevant experience that can be easily verified, that's a bad sign.

How Do I Start My Own ICO?

The most important thing you want to do is make sure that either you or someone (probably multiple people) involved have worked in and understand cryptocurrency and blockchain. Even if anyone can make an ICO, it doesn't mean that everyone should. You need to be able to answer questions on the spot about every little detail pertaining to your ICO.

You should also ask yourself if you really think that your business will actively benefit from an ICO. Basically, after reading this article, you should consult someone who can take a look at your specific idea and tell you if it is a slam dunk or not. If it's not, you might be better off going through safer avenues of funding. 

If you're determined to move forward, you need a white paper, which is a document that should identify exactly what your currency can offer that has never been done before, or how you'll make an established idea better than anyone else has. This document should be engaging, informative, and very, very detailed, like the white paper for Ethereum, one of the most successful ICOs yet.

Like any business, you need to hook your buyer by the end of the first page. Ethereum's white paper takes the time to explain what blockchain is, and then goes on to detail how they intend to build on the progress that Satoshi Nakamoto made and create something exciting. They do all of this by the end of the first page. Now, does every single white paper need to include an unabridged history of blockchain including the time that guy paid 10,000 bitcoins for a pizza? Probably not, but it should be understandable to someone without any knowledge of how these systems work.

Marketing Your ICO

Now that you've got your white paper, you need to advertise. You have two targets that you'll be trying to reach: people with knowledge of how cryptocurrency and ICOs work and people with basically no idea. You'll want to identify the people that would be most excited by your new venture since they'll be more eager to give you money if it means a deal for them.

In the case of BabyCoin (again, hypothetical) maybe we'd reach out to some popular mommy bloggers/vloggers and see if they would be interested in producing some content to showcase why BabyCoin is the biggest innovation in babysitting since The Babysitter's Club. Just make sure they disclose the nature of the deal to advertise for you: the SEC released a warning to investors stating that it is illegal for celebrities to use social media to endorse ICOs without disclosing what compensation they received.

You're also going to want to make your programmers and leads available to answer questions on social media like Reddit and Twitter. You should also consider submitting your ICO to some listings that run databases of what they perceive to be quality ICOs. This is how you get people involved in the crypto-community excited about your product, which will hopefully trickle through the Internet.

Great! So the word is out about BabyCoin and people are psyched, all that's left to do is determine the token pricing and distribution. You also might want to have a prototype in order just to prove you know what you're doing. Get your website and exchange set up and good luck.

What's With All These Celebrity ICOs?

If you've seen your favorite actors and entertainers like Jamie Foxs and Ghostface Killah encouraging their followers to invest in a hot new ICO, you might want to take a closer look.

Boxing superstar Floyd Mayweather, Jr., and DJ Khaled once promoted Centra Tech, an ICO that raised $30 million at the end of 2017, but Centra was ultimately called a scam in court and the two celebrities had to settle with U.S. regulators. As of August 2020, three Centra Tech founders have pled guilty to ICO fraud.

How Do I Determine Which ICOs Are Good?

Just make sure to do your homework. Because ICOs are barely regulated, you need to be way more careful than you'd be when investing in an IPO. Read the white paper, research the team members, and make sure they have a history in cryptocurrency.

You can also use trusted websites like Coinschedule.com, which only chooses ICOs that they have reviewed and consider to be legit and exciting. While you shouldn't fully trust any website offering a listing, they can be quite useful.

Is Someone Going to Regulate ICOs?

The SEC classified tokens from ICOs as securities in December of 2017, with SEC Chair Jay Clayton saying at the time that they had proved that "a token constituted an investment contract and therefore was a security under our federal securities laws. Specifically, we concluded that the token offering represented an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others."

This means the SEC is gearing up to crack down on ICOs that they deem to be misleading investors. The first strike came on December 11, 2017, when the SEC halted Munchee, a California company with a food review app. Munchee was attempting to raise money to create a cryptocurrency that would work within the app to order food. This is the first instance of the SEC issuing a cease and desist for an ICO for unregistered securities. Does this mean the hammer is about to drop? We'll see.

The Bottom Line

In the end, ICOs are an incredibly new way of raising money, and everyone is trying to adapt to the new ways without getting screwed over. If you think you're able to make a killing on a promising new ICO, just make sure to do your homework beforehand. Cryptocurrency is all about high risk and high reward, and ICOs are no different.

Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns no cryptocurrency in any quantity.

Use Case IDO versus ICOThe benefits of DeFi-ance

A top global cryptoprocessing company, CoinsPaid was crowned Payment Provider of the Year at the AIBC Dubai show last month. Having secured its position in the payments niche, the fintech is in the process of expanding its services to include decentralized finance (DeFi). 

Learn more about CoinsPaid

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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But there's more to it...

Utility Tokens

One example of a utility token in use today is the Ether token, as it relates to the Ethereum computing platform. Ethereum is the blockchain-based platform where the large majority of the current ICO’s have been developed. When using the Ethereum network, there are costs associated with the processing of blockchain-based transactions. These costs are paid in the form of the tokens used on Ethereum, called Ether. These transaction fees paid in Ether are called "gas" in the Ethereum network.

What’s Driving the Growth of ICOs

ROI values since ICO : https://icostats.com/roi-since-ico

In this way, a token sale represents a new model of crowdsourcing or crowdfunding, where the line between buyers and customers are blurred.

"We had one of the largest bounty programs in history with thousands of active participants working towards the success of the token launch, directly through our software's alpha demo," Galia Benartzi, CoFounder and VP of Business Development at Bancor explained.

"While we ourselves were a small team, we had ambassadors all over the world translating, explaining and creating great content about the Bancor protocol. These contributors remain more motivated than ever to see the project succeed, as they own a piece of the open source network via their tokens. Rather than paying marketing or PR firms, we can share these resources directly with end-users in a distributed and still orchestrated way. The reach is a step function larger and also feels much more authentically aligned. This is inline with blockchain's promise to decentralize every aspect of business, including growth itself."

*Disclaimer: I’m CoFounder of CoinCircle, Founder & Chairman of Crowdfunder.com, an investor in Blockchain companies, I hold Bitcoin and Ether, and was a participant in JOBS Act legislative and regulatory efforts in Washington D.C.

Four years on, it's time to reappraise the initial coin offering (ICO) era, and the easiest way to do it is by looking at investors’ portfolios.

There's a certain class of crypto denizen who derides anything that isn't bitcoin as garbage, and the long bear market that started in early 2018 certainly seemed to support that view. We're in a different time now where much of the work funded by the largest ICOs has been deployed. Those products now have at least a base of users and their token prices reflect it.

Most of these projects haven't hit their speculatively driven early 2018 highs, but they are far above their bear market numbers. For a certain class of investor, that means well above their token pre-sale prices.

Just to recap, the ICO was a way to raise a lot of money from the public by selling some kind of blockchain-based token (a secondary cryptocurrency that runs on a distributed ledger that also has its own native coin). ICO tokens didn't carry with them an ownership stake in a company, instead they were meant to provide access to some service later on.

(For example, a Netflix token might be good for one month of Netflix viewing.)

It wouldn't take long before the public started getting shut out of these sales for legal reasons, but the amount of money raised didn't slow down at first as deep-pocketed investors picked up the slack. According to CoinDesk data, projects raised about $5.5 billion through 2017 and $6.8 million through the first part of 2018, when the party came to a screeching halt.

Many of these tokens were released to the public at the end of their sales, even though they couldn't do anything useful yet. That didn't matter. People would still trade them. But when word came out that the regulatory sharks were circling this funding model, prices across the crypto market tanked and didn't recover for a long time. That was the beginning of Crypto Winter.

Nevertheless, startups found other ways to distribute tokens, such as offerings on exchanges or on automated market makers (AMMs) or by using smart contracts.

Quickly checking a few of the biggest early ICOs: Augur's REP (probably the first ICO for a token) is trading at $25.53, though it spent the bear market between $10 and $20 (often below $10). Bancor's BNT is trading at $3.63, this despite failing to trade above $1 from November 2018 to June 2020. 0x's ZRX is trading at $0.86, a price it fell below in August 2018, not to see again until this past February.

Tezos's XTZ is doing well. Brave's basic attention token set a new all time high in this bull market and sits right now in striking distance of its last one.

Of course, everyone's gotten a big bump as the overall market went up, everything is – after all – very correlated, but the difference today is those things were largely just ideas then and they are products now.

A few still seem to be struggling. KIN's price remains something like it's always been and Status's SNT also looks like it can't catch the old spark.

Still, by and large the big projects that raised most of their funds up front by selling off a token for usage before there was anything to use (almost always in lieu of selling equity in the company) don't seem to have cut and run and are starting to find markets.

This goes against the received wisdom in the broader crypto culture, where the term ICO has become a dirty one.

Not everyone sees it that way now, though.

"I think ICOs regardless of their regulatory status just conceptually represent a new technological way of forming capital," Jake Brukhman, founder of CoinFund, said. In particular, he noted, the venture capital world tends to follow certain scripts or heuristics that can make it hard for new ideas to get the resources they need.

"What the ICO boom allowed us to do is allocate some capital to some ideas that seem crazy," Brukhman said.

Keld van Schreven, a cofounder of a European digital asset investment company, KR1, took it a step further. "I think it's the greatest funding mechanism we've ever invented," he said. "It was like a really beautiful house party but it got gatecrashed by people that ruined it."

KR1 has invested in the data product Bluzelle, the blockchain ecosystem Cosmos and, in particular, it went very long on the platform for funds, now known as Enzyme but formerly known as Melonport, among others.

He continued, "The impact of the ICO boom is first of all it created a lot of attention and a lot of marketing around digital assets. One could argue that if you didn't have that cycle we wouldn't be where we are today in terms of mindshare."

Brukhman said, "Our first fund, it definitely operated during the ICO era. That launched in July of 2015. ... [I]t was very small and experimental. It actually did very well." CoinFund bought projects like Augur, Filecoin and NuCypher, as examples.

"It's only this year that some of the assets, like Dfinity for example, came to fruition," Brukhman said. While declining to go into detail, Brukhman made it clear that this first fund has been a success.

Everyone acknowledges that a lot of bad projects and bad actors took advantage of the approach before long, but van Schreven said that from where he sat there were also a lot of well-intentioned projects. To him, it wasn't hard to tell which had potential and which were obviously nonsense.

But people are good at talking themselves into bad decisions when there's a boom. "It's the frailty of the human. People want in on something blowing up," he admitted.

Gregory Di Prisco launched a fund in 2017 called Distributed Capital, which persists to today but in a different form. "We saw the opportunity set as: 'There's this new type of asset on Ethereum, and there's only 5 of them now we think there's going to be a lot more," he said.

The new asset was tokens, most of which would follow the ERC-20 standard. There were hardly any when Distributed started, but Di Prisco and his colleagues knew more would come. Even if Ethereum proved to be hopeless, Di Prisco said, they viewed it this way: "We are almost certainly going to be right about the desire to buy them and trade."

At that time, he said, there were hardly any tokens yet and few other funds participating in them. Very few pools of money funded by limited partners had rules that allowed for anything like cryptocurrency. Di Prisco said the playing field at that time for pre-sales and early ICO bets was limited.

Across the various investors we spoke to, the leaders in token purchases early on seemed to have been Polychain, Pantera, Fenbushi Capital, CoinFund and, to a lesser extent, the Digital Currency Group, because it still preferred equity deals. (DCG owns CoinDesk.)

Pantera Capital launched a fund then known as the Pantera ICO Fund, which has since rebranded to the Early-Stage Token Fund.

Pantera partner Paul Veradittakit said in a phone call, "We felt there was an opportunity to create a fund just to invest in projects that were releasing tokens," but to do so early on, in pre-sales and before the project launched.

"We figured people could access Bitcoin and Ethereum so we figured, just do an exclusively early-stage projects for investors," Veradittakit said.

That fund was easily filled and it remains an open-ended hedge fund, with over $1 billion assets under management. It has continued to make active investments so it's not limited to the ICO era, but it still holds a large quantity of tokens from that time. It has investments in ZRX, FIL, DOT, OGN and other early projects from that era.

The fund has made itself an active participant in the communities it has invested in. "We are staking. We are providing liquidity. We are providing governance and voting, all of that stuff."

On average, Pantera holds for three years, looking at itself as a long term partner (at least on a crypto time scale), but, he said, "There are times when the returns are so high it makes sense to take a little off the table."

So it has exited parts of some positions or even made significant shifts when there are material changes in the company.

The bear market was not easy, however. "Quite a few of the tokens that we invested in 2017, 2018, hit a rough patch during the bear market," Veradittakit said. "We didn't do the flips and the dumps and things like that and therefore we had to ride through it. We actually didn't lose that many investors."

Some left, but many stuck around. The fund posted strong returns through 2020 and so far into 2021. From January 2020 to the present it is up 2,807%, according to Pantera.

The ICO boom days were a very strange time and one in which some of the investors we spoke to took bold moves that don't typically fall within the bounds defined by best practices for investing. For example, both Distributed and KR1 decided to go extremely long on one token (MKR and MLN, respectively).

Van Schreven called the bet on Melonport "fund suicide," though it turned out to be anything but. The MLN token for the project now known as Enzyme trades at $105. It still hasn't cracked its prior all-time high but it's well above what it sold for early on; van Schreven said KR1's investment there is up well over 1,000%. It's also up more than 10,000% on its investment in ATOM, the Cosmos coin.

The time was so buzzy that it started to attract Web 2 professionals who quickly realized how limited was the blockchain space. Brukhman contends that this was good as well. Folks who were used to having lots of developer tooling to work with found Web 3 lacked it. So a lot of that stuff got made.

Not all the investors from that era look back on ICOs favorably, though. Di Prisco's fund did very well in part because it got out of so many positions at the top. He still thinks that by and large the 2017 ICO approach isn't a healthy one.

"I think that fundraising mechanism hamstrung a lot of projects," Di Prisco said, explaining that companies should not raise all their funding up front. It forces them to put too much energy into treasury management and not enough into making something good, and if they get it wrong, they can get largely wiped out.

Case in point, messaging startup Status raised nearly 300,000 ETH in 2017 (over $100 million) but was still forced into laying off 25% of its staff in 2018.

But that doesn't mean that the ICO form wasn't taking investing in a direction that has potential.

Even van Schreven admits things got out of hand. "At the tail end of it, I think probably there was bad money allocated. The vast portion was people with good intentions," van Schreven said.

"Blockchain technology can create hyper-efficient ways of forming capital. Now, secondarily, let's go find legal frameworks for that and make it work," Brukhman said.

Still, van Schreven remembers it fondly. "The ICO should be held up as one of the breakthrough moments for technology on the funding side," he said, lamenting that "it's gone back to more of a venture capital model to put the hand brake on it."

An initial coin offering (ICO) is the cryptocurrency industry’s equivalent to an initial public offering (IPO). A company looking to raise money to create a new coin, app, or service launches an ICO as a way to raise funds.

Interested investors can buy into the offering and receive a new cryptocurrency token issued by the company. This token may have some utility in using the product or service the company is offering, or it may just represent a stake in the company or project.

How an Initial Coin Offering Works

When a cryptocurrency startup wants to raise money through ICO, it usually creates a whitepaper which outlines what the project is about, the need the project will fulfill upon completion, how much money is needed, how many of the virtual tokens the founders will keep, what type of money will be accepted, and how long the ICO campaign will run for. 

During the ICO campaign, enthusiasts and supporters of the project buy some of the project’s tokens with fiat or digital currency. These coins are referred to the buyers as tokens and are similar to shares of a company sold to investors during an IPO.

If the money raised does not meet the minimum funds required by the firm, the money may be returned to the backers; at this point, the ICO would be deemed unsuccessful. If the funding requirements are met within the specified timeframe, the money raised is used to pursue the goals of the project.

Special Considerations 

Investors looking to buy into ICOs should first familiarize themselves with the cryptocurrency space more broadly. In the case of most ICOs, investors must purchase tokens with pre-existing cryptocurrencies. This means that an ICO investor will need to already have a cryptocurrency wallet set up for a currency like bitcoin or ethereum, as well as having a wallet capable of holding whichever token or currency they want to purchase. 

How does one go about finding ICOs in which to participate? There is no recipe for staying abreast of the latest ICOs. The best thing that an interested investor can do is read up about new projects online. ICOs generate a substantial amount of hype, and there are numerous places online in which investors gather to discuss new opportunities. There are dedicated sites that aggregate ICOs, allowing investors to discover new ICOs and compare different offerings against one another.

Initial Coin Offering (ICO) vs. Initial Public Offering (IPO)

For traditional companies, there are a few ways of going about raising the funds necessary for development and expansion. A company can start small and grow as its profits allow, remaining beholden only to company owners. However, this also means they may have to wait a long time for funds to build up. Alternately, companies can look to outside investors for early support, providing them a quick influx of cash—but typically coming with the trade-off of giving away a portion of ownership stake. Another method is to go public, earning funds from individual investors by selling shares through an IPO.

While IPOs deal purely with investors, ICOs may deal with supporters that are keen to invest in a new project, much like a crowdfunding event. But ICOs differ from crowdfunding in that the backers of ICOs are motivated by a prospective return on their investments while the funds raised in crowdfunding campaigns are basically donations. For these reasons, ICOs are referred to as “crowdsales.”

ICOs also retain at least two important structural differences from IPOs. First, ICOs are largely unregulated, meaning that government organizations like the Securities and Exchange Commission (SEC) do not oversee them. Secondly, due to their decentralization and lack of regulation, ICOs are much freer in terms of structure than IPOs.

ICOs can be structured in a variety of ways. In some cases, a company sets a specific goal or limit for its funding, which means that each token sold in the ICO has a pre-set price and that the total token supply is static. In other cases, there is a static supply of ICO tokens but a dynamic funding goal—this means that the distribution of tokens to investors will be dependent upon the funds received (i.e. the more total funds received in the ICO, the higher the overall token price). 

Still, others have a dynamic token supply which is determined according to the amount of funding received. In these cases, the price of a token is static, but there is no limit to the number of total tokens (save for parameters like ICO length). These different types of ICOs are illustrated below.

Advantages and Disadvantages of Initial Coin Offerings

In an IPO, an investor receives shares of stock in a company in exchange for her investment. In the case of an ICO, there are no shares per se. Instead, companies raising funds via ICO provide a blockchain equivalent to a share—a cryptocurrency token. In most cases, investors pay in a popular existing token—like bitcoin or ethereum—and receive a commensurate number of new tokens in exchange.

It's worth noting just how easy it is for a company to launch an ICO to create tokens. There are online services that allow for the generation of cryptocurrency tokens in a matter of seconds. Investors should keep this in mind when considering the differences between shares and tokens—a token does not have any intrinsic value or legal guarantees. ICO managers generate tokens according to the terms of the ICO, receive them, and then distribute them according to their plan by transferring them to individual investors.

Early investors in an ICO operation are usually motivated to buy tokens in the hope that the plan will succeed after it launches. If this actually happens, the value of the tokens they purchased during the ICO will climb above the price set during the ICO itself, and they will achieve overall gains. This is the primary benefit of an ICO: the potential for very high returns.

ICOs have indeed made many investors into millionaires. For example, in 2017, there were 435 successful ICOs, each raising an average of $12.7 million. So, the total amount raised for 2017 was $5.6 billion, with the 10 largest projects raising 25% of this total. Furthermore, tokens purchased in ICOs returned an average of 12.8 times on the initial investment in dollar terms.

As ICOs have come to the forefront in the cryptocurrency and blockchain industries, they’ve also brought along challenges, risks, and unforeseen opportunities. Many investors buy into ICOs in the hopes of quick and powerful returns on their investments. The most successful ICOs over the past several years are the source of this hope, as they have indeed produced tremendous returns. This investor enthusiasm can also lead people astray, however. 

Because they are largely unregulated, ICOs are rife with fraud and scam artists looking to prey on overzealous and poorly informed investors. And since they are not regulated by financial authorities like the SEC, funds that are lost due to fraud or incompetence may never be recovered.

The meteoric rise of ICOs during 2017 drew backlashes from a series of governmental and non-governmental entities in early Sept. 2017. The People's Bank of China officially banned ICOs, slamming them as counterproductive to economic and financial stability. 

The Chinese central bank prohibited using tokens as currency and banned banks from offering services related to ICOs. As a result, both bitcoin and ethereum prices tumbled, in what many regarded as a sign of more cryptocurrency regulation to come.  The ban also penalized already completed offerings. In early 2018, Facebook, Twitter, and Google all banned ICO advertisements.  

There is no guarantee that an investor won't be on the losing end of a scam when investing in ICOs. To help avoid ICO scams, investors should:

Make sure that project developers can clearly define what their goals are. Successful ICOs typically have straightforward, understandable whitepapers with clear, concise goals.Know the developers. Investors should strive for 100% transparency from a company launching an ICO.Look for legal terms and conditions set for the ICO. Because outside regulators generally do not oversee this space, it is up to an investor to ensure any ICO is legitimate.Make sure that ICO funds are being stored in an escrow wallet. This is a wallet that requires multiple keys in order to be accessed. This is useful protection against scams, particularly when a neutral third party is a holder of one of the keys. Securities and Exchange Commission Introduces the HoweyCoin

ICO activity began to decrease dramatically in 2019 because of the legal gray area they inhabit.

The U.S. Securities and Exchange Commission introduced a fake coin called the HoweyCoin to demonstrate to small investors the dangers of ICOs. The HoweyCoin is named after the Howey test, which is a test to determine whether an investment is a security or not. The Howey Test is intended to determine that a transaction represents an investment contract if a person invests their money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.

The SEC used this standard to charge Kik, a messaging service that raised $100 million in an unregistered ICO, with unlawful sale of a security. The SEC has also taken action against Telegram, another messaging app that also ICO'ed.

According to the SEC, an ICO is no different from an IPO if the underlying token raises money for an already existing business and does not operate independently of that business.

Example of an Initial Coin Offering

As the ICO space got bigger and bigger, so too did the sums raised by the largest projects. When evaluating ICOs, one can consider both the amount of money raised in the ICO as well as the return on investment.

Sometimes ICOs with a remarkable return on investment are not the projects that raise the most money and vice versa. Ethereum's ICO in 2014 was an early pioneer, raising $18 million over a period of 42 days. Ethereum has proven to be crucial for the ICO space in general, thanks to its innovations with regard to decentralized apps (dApps). When it debuted, ether was priced at around $0.67, and as of Sept. 24, 2020, it trades at $348.99.

In 2015, a two-phase ICO began for a company called Antshares, which later rebranded as NEO. The first phase of the ICO ended in Oct. 2015, and the second continued until Sept. 2016. During this time, NEO earned about $4.5 million. While it is not one of the largest ICOs in terms of money raised, it has provided exceptional ROI for many early investors. The price of NEO at the time of the ICO was about $0.03, and at its peak, it traded at roughly $187.40.  

More recently, ICOs have generated significantly larger amounts in terms of total funds raised. During a one-month ICO ending in March 2018, Dragon Coin managed to raise about $320 million. More recently, the company behind the EOS platform shattered Dragon Coin’s record by raising a whopping $4 billion during a yearlong ICO. 

The creation of the blockchain for Bitcoin became the first digital money to solve the double-spending issue without using a trusted authority or central server.

The internet and blockchain are evolving at a rapid speed, e-Commerce and blockchain businesses demand effective marketing and advertising solutions.

It can be challenging to find a platform in the cryptocurrency industry that can help your business expand these days. We have, however, identified a way to combine staking and advertising with a smart marketing token.

With a young and innovative team full of unique ideas, the smart marketing token (SMT) platform came up with the concept of providing services for ICO, IDO, and IEO newbie platforms.

Their goal is to promote the blockchain voice over the world. The smart marketing token platform will function as a business that provides services through its token. 

The essential utilities will be:

SMT: the primary way to pay for services will be through SMT. Also, fiat payments will be converted into seasonal SMT buybacks. SMT holders: will first have access to the broader marketing projects and the smart marketing educational platform. 

With STC launchpad fundings, holders will receive unique bonuses. Additionally, they will also have access to the complete fundamental and legal project analysis.

Additionally, SMT Staking will be available on the platform after October 31, 2021. 

Although the smart marketing token seeks to integrate promotion into each project on a personalized basis, some categories will be semi-standardized, such as: 

STC launchpad promotion;Long term community building;Youtube and Twitter influencers promotion; Project’s design analysis;Ads optimization & content marketing;Advanced marketing networking;A/B testing;Affiliate program establishment.What is the smart marketing token? 

SMT is the first tokenized marketing agency platform built on the Ethereum Network. 

Their main goal is to support fundamental projects that enter the cryptocurrency world with professionalism, fitted, and elastic marketing approaches. They will be responsible for the promotion of blockchain projects created on the Student Coin Terminal.

Most of the services provided will be paid and settled in the native SMT. The platform aims to create a bridge between the agency’s clients and token holders, from where clients can directly benefit investors.

To access their services, clients will need to buy SMT directly from the exchange and transfer it to the smart marketing agency.

Also, the inflows that the fiat-based clients will create, will be turned into a massive exchange buyback, ensuring that the payments are benefiting token holders.

Aside from promoting their ICO, SMT is the foundation of a solid marketing firm, developing comprehensive products and solutions with token success reliant on smart marketing services.

To summarize their ecosystem, we have the following: 

To participate in the SMT ecosystem, you must possess the token, which will be available in August 2021. 

The SMT ICO will be divided into the following stages: 

On August 2, 2021, they will begin issuing their ICO. Users will be able to obtain tokens until October 31, 2021. The ICO will be divided into 100 phases. Each time the price rises by 1%.Phases cost $20,000 each.There will be a total supply of 10 million SMT tokens; the platform will sell only 55% of their ICO, starting from the price of $0.50. 

You can purchase SMT Tokens through the website, using a credit card, Coinbase, or Metamask wallet. 

You can now expand your business and level up while purchasing and participating in the SMT flourishing business. Take a peek at their website here: smart marketing token.

A new controversial way of raising funds with less regulation has captivated the attention of investors, it's called an initial coin offering, or ICO.

An ICO is a fundraising vehicle, typically for start-ups. Investors send some form of currency, usually bitcoin or ethereum, to the company. In exchange, they get an entirely new cryptocurrency.

But before you bet your retirement on the next initial coin offering, beware of the risks.

First is you'll have fewer rights.

An ICO is a lot like an initial public offering, but instead of getting shares in return, investors get digital assets, called tokens. One major distinction — tokens typically don't give investors any equity stake or voting rights in the underlying company. That means you're just betting that the coins will increase in value over time.

The second risk is limited regulation. If a company you've bought coins from decides to run away with your tokens, there is a high chance you will not be able to get them back. There is no dedicated "ICO regulator."

Sure, there is the SEC, but ethereum co-founder Charles Hoskinson says it has become increasingly more challenging to regulate this new asset class given its highly technical nature and global reach.

"Problem is, this is an intrinsically global marketplace ... the old financial world used to work where you had a bunch of hubs ... we now live in a [world] where cryptocurrencies have turned every phone into a bank. So regardless of what a regulator says ... people don't actually have to comply. The cost of compliance is pretty low," Hoskinson told CNBC.

While the SEC has warned investors to be cautious when investing in ICOs, its actions have been conservative and measured.

"They have taken a feasible approach to stop, look and listen. Security laws can be applied to some of these offerings," said Paul Atkins, former SEC commissioner, to CNBC.

Less regulation is one of the reasons start-ups have found coin offerings to be an efficient way to raise funds.

So far this year, start-ups have raised $1.25 billion via initial coin offerings, surpassing early stage VC funding, that according to CB Insights.

Venture capital firms are paying attention.

Filecoin recently raised money via an ICO from Sequoia Capital and Union Square Ventures, two respected VC firms in Silicon Valley.

And this may be only the start.

"I say we're in the very early stage of an exciting new technology," said Matt Huang, partner at Sequoia Capital.

Still, a growing number of experts inside the cryptocurrency space say the ICO market could crash, most likely driven by a large-scale regulatory crackdown, or a failure involving a large company that has participated in a token offering.

"Hard to know what the exact trigger would be ... but these things tend to cascade," said Hoskinson.

So when is it coming?

"If I had to guess ... in the next six to 12 months," said Hoskinson.

Until then, more start-ups are rushing to get in on the action, including Unikrn, an online esports gambling platform. Co-founder Rahul Sood told CNBC that he opted for an initial coin offering to sidestep traditional banks and make it easier for his international audience to bet on esports.

"Blockchain technology works very well for a highly regulated business like ours," said Sood.

So far, Unikrn has raised more than 91,000 ethereum or roughly $27 million.

Still, Sood is cautious on the euphoria and misperception surrounding ICOs.

"It's dangerous to go out there and convince people that this is an investment. You're not getting equity. No voting rights. No shares. You're getting tokens that can be used on the Unikrn platform in meaningful ways."

Words of wisdom from someone who is hoping to raise $100 million in his ICO.

The billionaire-backed crypto exchange, Bullish, faces scrutiny after new reports reveal an alleged ‘price pump’ scheme. 

In 2019 Block.one received an SEC fine as a consequence for not registering an ICO for EOS. Initial sales for EOS over the first 11 months raised over $4 billion, which made it one of the largest to date. A sale this large naturally raised many eyebrows in the crypto community.

Block.one is a software developing firm. A slew of billionaires and big names in the industry are the funders of the company. This includes the likes of Peter Thiel, hedge fund moguls Alan Howard and Louis Bacon, and entrepreneur Christian Angermayer.  Its mission as a company was initially for the development of innovative tools for blockchain adoption. 

Block.one reexamined

However, it soon fell into steamy controversy. Following the SEC fine, users sued Block.one, calling the sales a “fraudulent scheme” that didn’t follow through on its mission. 

Now, recently published reports reveal new information on those previously raised concerns regarding the situation. The report comes from Integra FEC, a forensic financial analysis firm, led by the University of Texas at Austin McCombs School of Business finance professor John Griffin.

The paper highlights a series of questionable trades during the EOS ICO. According to Griffin, the patterns between two potentially connected persons appeared to “pump” the price of EOS. 

“The seemingly artificial demand from the suspicious accounts had two effects,” he wrote. “It directly manipulated EOS’s offering price upward through the extra buying and inflated the market value of the token. Second, it created the false impression of the value of the token, which enticed others to want to purchase the ICO token.”

The information comes as Block.one prepares for the launch of its new exchange dubbed Bullish. Allegedly, Bullish will receive funds stemming from the ICO sale, which now is under scrutiny once again. 

Identifying the holes

Griffin’s report targets 21 accounts over the course of the ICO. All the accounts appeared consistent with massive purchases of EOS. Additionally, all of those accounts then sold the currency to exchanges all within an hour. In the crypto industry, the name for this is “recycling.” The total of these trades equaled almost $815 million. 

In defense of his research, Griffin explained how the fixed supply of tokens for purchase “buoyed” the price. “Selling through the exchange could have minimal impact on the price, especially since it can be sold slowly and in a liquid market,” Griffin explained. “Market makers make a spread and make money on the spread,” he said. “These traders consistently lost money on their trades. Why would one engage in a losing strategy unless making money somewhere else?”

In a comment to Bloomberg, Cornell Law School Professor Robert Hockett called the analysis “impeccable.” Hockett specialties in corporate law and financial regulation. 

“There’s enough smoke here to suggest there’s a fire. This is what the SEC would call classic fraud and pump and dump. This is taking advantage of retail investors who don’t know what’s going on underneath and could be easily fooled.” Hockett believes that the SEC should definitely be investigating. 

According to the Cornell professor, if the findings are true this could mean big consequences. It would violate the Securities Act of 1933 and the Exchange Act of 1934.

This comes at a time of heightened attention to the crypto space from the SEC. However, the SEC reportedly had no comment on this case at the moment. 

This story was seen first on BeInCrypto

On 11 August 2021, the Information Commissioner's Office ("ICO") published a consultation regarding its draft guidance for international transfers of personal data ("Guidance"), as well as associated data transfer tools which serve to replace Standard Contractual Clauses ("SCC").

The ICO's post-Brexit data protection actions include these new documents, which are subject to consultation:

Proposals aimed at addressing international transfers of personal data outside of the U.K. An international transfer risk assessment guidance proposal (the "Risk Assessment Guidance") The international data transfer agreement ("ITDA") Draft U.K. Addendum to the EU Commission standard contractual clauses

The ICO's proposals and draft tools indicate the regulator is attracted to taking advantage of its ability to impose its own regulations post-Brexit. With the aim of aiding organisations navigate international data transfers subject to the UK GDPR regulations, the consultation provides an indication as to how data protection regulations are likely to be applied in the UK. Notably, with regards to countries that have not been granted adequacy status under the UK GDPR, the transfer risk assessment ("TRA") provides an approved format for executing the required risk assessments regarding the international transfer of personal data.

The consultation addresses considerations which allow the ICO to review areas of the UK GDPR they consider require clarification in relation to the IDTA. The ICO's document equally clarifies the UK's position in relation to the European Commission's new SCCs, published in June. Further information regarding the European Commission's new SCCs can be found  here.

The ICO has published a thorough post-Brexit consultation which addresses international transfers of personal data out of the UK and aims to interlink EU and global data protection and privacy laws and practice. It will be interesting to analyse and explore the responses the ICO receives with regards to their consultation as well as how the ICO will apply these new regulations.

The ICO consultation can be found  here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

If there's anything to put the final nail in the coffin of cryptocurrency "initial coin offering" overexuberance, it's tough to beat this: Authorities have unveiled a string of charges in recent weeks against a group of alleged scammers, operating from Serbia, China and beyond, who allegedly bilked global investors out of $70 million.

See Also: Lessons Learned: How IT SecOps Can Improve Risk Posture and Readiness in 2021

The scammers' alleged weapon: investors' thirst for cryptocurrency profits, especially during the ICO bubble of 2017 and early 2018.

Such was the frenzy then for new coin offerings that even Paris Hilton and actor Steven Seagal were plugging them.

But at least in the case of Seagal-endorsed Bitcoiin2Gen, aka B2G, as well as a variety of other ICOs and supposed trading and mining platforms - Bancde Options, BTC Mining Factor, Dragon Mining, Options Rider, Start Options and Trinity Mining - it was all a lie, or rather, a collection of lies with the occasional facts thrown in, prosecutors say.

Take the alleged thirst for cryptocurrency being demonstrated by Seagal, star of "Above the Law," "Hard to Kill," and over-the-top action-movie classic "Under Siege." In early 2018, Bitcoiin2Gen issued a press release saying that "Zen Master Steven Seagal has become the brand ambassador of Bitcoiin2Gen" - a then-new cryptocurrency based on the Ethereum blockchain - that Seagal "wholeheartedly" endorsed. At that point, Bitcoiin2Gen claimed to have already raised $20.4 million.

Shortly thereafter, the U.S. Securities and Exchange Commission launched a probe, subpoenaing dozens of firms and advisers associated with ICOs, while the FBI and Internal Revenue Service's Criminal Investigations division also began investigating.

In 2017, the SEC had warned that "coins sold in ICOs may be securities," and thus subject to anti-touting rules. The SEC also issued a reminder, per those rules, that "any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope and amount of compensation received in exchange for the promotion."

Charged: Kristijan Krstic

Details of what prosecutors allege was a gang of ICO-touting fraudsters, headed by a Serbian national named Kristijan Krstic, 45, aka “Felix Logan,” began to emerge last year.

U.S. authorities say the gang promised 80% average returns, 20% compensation on lost trades and the ability for investors to “purchase bitcoin at half market price” thanks to their cryptocurrency "24-7" mining and asset-trading platforms.

Last July, Krstic was one of more than a dozen suspects indicted by a Dallas-based federal grand jury on money laundering and wire fraud charges. If convicted of all of the charges filed against them, each faces up to 20 years in prison.

Six of the suspects - all Serbian citizens - were subsequently arrested by police in Serbia, based on a provisional U.S. arrest warrant.

The gang allegedly used an array of fake names and photographs - "most female" - to advertise the firms providing the trading activity, according to the Justice Department.

One of the alleged members of Krstic's gang, 32-year-old Antonije Stojilkovic, who was indicted last July, earlier this month agreed to be extradited to the U.S. to face the charges. Serbia and the U.S. first ratified an extradition treaty in 2019.

Bitcoiin2Gen and Start Options

A federal indictment unsealed Tuesday further charges Krstic with securities fraud, wire transfer and money laundering crimes tied to two alleged cryptocurrency schemes: Bitcoiin2Gen, which Krstic founded, as well as Start Options, which he founded and for which he served as CFO, soliciting investments from individuals from 2017 to 2018, prosecutors say.

Earlier this month, an SEC complaint charged Krstic, as well as promoter John DeMarr and his associate Robin Enos, with using the two supposed online trading platforms to defraud investors out of more than $11 million.

“Bitcoiin2Gen was a sham, and Krstic and DeMarr allegedly misappropriated millions of dollars of investor funds for their own personal benefit,” according to the SEC. In addition, the “defendants misleadingly tout celebrity Steven Seagal as an investor” of the B2G tokens, when they had instead paid him - in cash and Ethereum - to tout their product.

Prosecutors say the gang pocketed investors' funds. "In reality, the money sent by investors in Start Options and B2G was never invested as promised, and instead was funneled to a Philippines-based financial account and digital-currency wallet, and to a U.S.-based promoter of the fraud," the Department of Justice says.

"Subsequently, the U.S.-based promoter transferred approximately $7 million in investor funds from B2G and Start Options to Krstic, and Krstic thereafter stopped responding to all communications and absconded with those investors’ funds," it adds. "A press release issued by Start Options falsely claimed that the company had been sold to Russian venture capitalists."

Krstic continues to fight a request that Serbia extradite him to stand trial in the U.S.

Seagal Surrenders Profits, Pays Fine

In February 2020, meanwhile, the SEC announced that it had settled previously undisclosed charges against Seagal over his failure to disclose that he'd been promised $250,000 in cash and $750,000 worth of B2G tokens for his endorsement. Seagal was not named in the federal grand jury indictment.

"These investors were entitled to know about payments Seagal received or was promised to endorse this investment so they could decide whether he may be biased," Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit, said at the time. "Celebrities are not allowed to use their social media influence to tout securities without appropriately disclosing their compensation."

Without admitting any guilt, Seagal paid $314,000 to the SEC - comprising what he'd earned plus interest, and the same amount again in penalties. "In addition, Seagal agreed not to promote any securities, digital or otherwise, for three years," the SEC said.

Hence when it comes to touting ICOs, the odds look good that this is one sequel Seagal will decline.

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The United States Securities and Exchange Commission has charged three of Chinese billionaire Guo Wengui’s companies over an initial coin offering (ICO) and initial public offering (IPO) that fetched around $487 million combined.

The infamous Guo, also known as Miles Kwok or Miles Guo, is an exiled Chinese businessman who currently resides in New York. Wengui is known for his controversial political takes and his ties to Donald Trump confidant Steve Bannon.

The SEC submitted a cease and desist order on Monday, with the documents showing that Guo’s companies have agreed to pay a settlement with the SEC within 14 days.

The SEC outlined two unregistered securities offerings from Guo’s firms, with GTV Media Group, Saraca Media Group and Voice of Guo Media conducting an IPO between April 1 and June 2020. Saraca and Voice of Guo, dubbed the “G Entities,” also conducted an ICO over the same period.

The ICO raised $34 million from investors seeking exposure to the firms’ G-Dollars — a virtual currency the issuer claimed could be exchanged for gold or fiat currency or used to purchase goods on the G Entities’ online platform.

The SEC found that the G Entities did not provide investors with information regarding how its purported digital asset and platform would be developed, adding:

“The G Entities have yet to develop or distribute the digital assets sold in the Coin Offering or a platform that would allow users to transact with or sell digital assets.”

Related: SEC chair doubles down, tells crypto firms 'come in and talk to us'

Proceeds from the ICO were commingling with the funds raised in its $453million stock offering that purported to distribute 10% of GTV’s common shares. The unregistered IPO attracted participation from 5,500 people.

The firms have agreed to pay $486.6 million in fines, prejudgment interest of $17.6 million, and a civil penalty of $35 million combined.

The Securities and Exchange Commission (SEC) has brought charges against three additional defendants in its ongoing case against Boaz Manor and Edith Pardo for raising $30 million in an allegedly fraudulent initial coin offering (ICO).

The case against Manor and Pardo and their companies, CG Blockchain and BCT, Inc. alleges that the two hid Manor’s real identity using a combination of aliases and physical disguises, including growing a beard and dying his hair, to hide his past as a convicted criminal. Together, Manor and Pardo raised $30 million from investors for BCT’s product, a blockchain-based alternative to the Bloomberg Terminal, based on fraudulent claims. 

The new charges against Ali Asif Hamid, Michael Gietz, and Cristine Page allege that the three served in leadership positions in the ICO. According to an SEC statement, the three have been charged with selling unregistered securities and helping Manor and Pardo conceal Manor’s criminal history and bamboozle investors. 

This case is one in a string of cases brought by the SEC against fraudulent ICOs in the wake of 2017’s ICO boom and bust. 

So far, only Page has agreed to a settlement that includes permanent injunctions, a disgorgement of the digital assets that she received in connection with the ICO, and a civil penalty of $192,768.

In April 2020, the U.S. Attorney’s Office for the District of New Jersey asked the SEC to pause its civil action against Manor and Pardo while it conducts its own criminal case against the two. The SEC did not oppose the motion.

The first thing anyone needs to know about ICOs is that they're no longer called ICOs.  You may remember the mania-fueled days of 2017 when projects with little more than a whitepaper raised over a million dollars in less than a day with an initial coin offering, an ICO. Some of these ICOs proved to be outright scams, whereas others were legitimate and the funds garnered helped to launch some of the most successful blockchain projects.

Today blockchain technology is safely facilitating investing outside of traditional capital markets. Crypto tokens facilitate capital formation and provide incentives within blockchain networks.  Token sales have become an essential part of the crypto economic ecosystem and how projects rise to prominence.

We've built a list of the best crypto wallets availableCheck out our list of the best crypto exchanges right nowHere's our list of the best mining rigs out thereHistory of the ICO

Bitcoin was the world’s first cryptocurrency, arriving in 2010 via a shadowy figure, Satoshi Nakamoto. As the whitepaper circled throughout crowds of technocrats and entrepreneurs, the world understood that this novel use of decentralized technology could unlock countless innovations that could serve as a new foundation for the world’s financial infrastructure. The most standout functionality at that time was Bitcoin’s ability to create a natively digital currency that operated outside of the bounds of sovereign reach. If Bitcoin could be used to incentivize activity on the network and therefore hold intrinsic value, then this model could be replicated.

As early as 2012 people realized they could mint new cryptocurrencies that could be sold to raise money for their projects, no VC backing needed. The most famous early example of a cryptocurrency sale was Ethereum’s public token offering. Ethereum raised about $2.3 million in the first 12 hours. Participants paid through Bitcoin, which was the only way to access Ethereum at the time.

Since then, token offerings have exploded in popularity. 2017 was the year of ICO mania that marked the definitive arrival of token sales.  Over the course of that year, there were over 400 sales that rose an average of  $12.7 million. These token sales were extremely lucrative for early purchasers— it was common for investors to see 10X returns. Moreover, they helped cryptocurrency projects secure the funding needed to expand their operations. As of June 2018, more than 15 projects had taken in over $100 million. The total amount invested in 2017 was $5.6 billion. The easy money backing token offerings resulted in a frothy token market and generated extraordinary wealth and opportunity for those who were able to cash in at the right time.

As an unregulated market, thousands of investors were swindled during the ICO mania of 2017.  These scams drew the ire of companies and regulators alike. The People’s Bank of China completely banned token sales and prohibited banks from offering services to projects using token sales to raise capital. Facebook, Google, and Twitter meanwhile blocked ICO advertisements on their platform. Within the United States, token sales occupied a legal grey area. The SEC implemented the Howey test to determine whether a token had been launched simply to raise capital without providing any actual utility within a blockchain network. People today don’t like the term ICO because it indicates an association with an IPO, the sale of a security, and is triggering from a regulatory perspective. We’re still seeing the lingering effects of these early token launches and the harsh legal implications for projects who were accused of violating securities laws. Ripple, the organization that launched the XRP token in 2021, is in ongoing litigation after allegedly selling $1.3 billion through an unregistered, ongoing digital asset securities offering. The business of token sales at that time was high risk, high reward, in more ways than one.

How token sales work

In theory, you can tokenize anything of value— stocks, bonds, art, gold. Launching a token and the idea of ‘tokenizing’ something can be done in many different ways.

Utility tokens are created to serve a specific function or provide some sort of capability. For example, within the Ethereum network, Ether is used as the gas to pay for transactions and computational power to power programs that utilize the Ethereum blockchain. Consider these utility tokens as crypto commodities. One thing must be understood when launching a utility token, in order to not trigger securities laws: the token does not represent a share in a project.  As a result, they do not have any actual intrinsic value and they don’t come with any legal protections. They have value when used in association with a specific technology.

Whereas security tokens on the other hand are meant to be digital representations of actual financial instruments. They can represent fractions of assets like real estate or stock and must be traded in compliance with local securities laws. Financial services institutions are adopting the use of security tokens to bring efficiency and transparency to markets.

A newer token model is the profit sharing token, which aligns the incentives of the community with activity on the associated platform.

Key takeaways

Token sales have been one of the cryptocurrency sector’s most important innovations. The ease with which entrepreneurs can launch tokens to receive funding via the internet is greatly lowering the barriers to accessing capital.

In recent years token sales, combined with regulatory changes, have lowered the barriers to invest in start-ups and we’re seeing non-blockchain native projects use token models to bring innovation to their industry. Token sales are making our financial system global, open and more liquid. 

To summarize, token sales…

Are a new method for start-ups to raise moneyLeverage new technologies to facilitate capital formationAre mostly built using the Ethereum ERC20 standardAre very risky, so an investor should never invest more than they can afford to loseHere's our list of the best cloud mining services right now

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Using blockchain technology, initial coin offerings have become an alternative means of acquiring funding for business projects using the new, evolving digital financial market for tokens. In contrast to initial public offerings, which are governed by strict legal regulations, ICOs require only a white paper and some interesting features, such as a lack of barrier to entry, a scope for exponential growth, absence of geographical barriers and easy validation. 

Hence, it may not be surprising that the ICO market experienced extraordinary growth recently. Research shows that from January 2016 to August 2019, ICOs raised nearly $13 billion worldwide.

Despite the appealing benefits of ICOs, investors interested in them as an alternative investment face some dramatic risks. In this regard, a 2018 report from Satis Research Group investigated approximately 1,500 ICOs. From the sample, 78% projects were identified as scams, collectively valued at $1.3 billion.

Related: Crypto Crimes Rated: From the Twitter Hackers to Not Your Keyser, Not Your Coins

Together with my colleagues Niranjan Sapkota and Josephine Dufitinema, I conducted a study that was aimed to explore and answer the following question: What are the various types of scams in the ICO market, and what is the expected monetary loss of the average ICO scam? To investigate this issue, we employed web-scraping and created an intensive data library covering all ICOs launched from August 2014 to December 2019. Our unique, hand-collected data set covered 5,036 ICOs.

We found data of the funds raised for 1,014 ICOs, 576 of which turned out to be scams, totaling $10.12 billion in cumulative losses. The largest loss via scam is the so-called “Petro-scam,” from which investors lost a total $735 million.

scam categories

Dead, fake, or both

We retrieved ICOs that had been categorized as “listed” by dead-project aggregators DeadCoins and Coinopsy, and analyzed them to identify 13 different ways that investors can be fooled by scammers. If a Bitcointalk forum member identified the ICO with a fake team, fake project, fake wallet, fake social media or fake trading, we categorized the ICO as “fake.”

The classic exit scam

If an ICO failed to pay out promoters who were promised financial rewards (mostly in the form of tokens) for PR activities such as promoting the project on forums, Telegram channels, messengers, translating and localizing documents, posting on social media or on blogs, we categorized it as a “bounty scam.” If the developers and promoters who collected funds for an ICO suddenly disappeared while leaving investors without any information, we categorized those ICOs as an “exit scam.”

Compound scams and exploding airdrops

We observed many ICO scam accusations in which the same group of developers was actively conducting scams in other projects. This type of scam is categorized as “previous scammers” in our study. Next, we defined “airdrop scam” for incidents in which the scammers stole private keys from users. This can happen if scammers create a booby trap and users, expecting to receive free tokens, click on the links, thereby giving away their private information and ultimately losing their coins.

Exchange scams and the copy-pasters

Furthermore, developers intending to deceive investors seemed to prefer launching their ICO at a fraudulent exchange. This type of scam is categorized as an “exchange scam.” We also observed that copying the white paper of a promising ICO and launching it using a similar or different name is another deceptive tactic used among scammers. This type of scam is categorized as “white paper plagiarism scam.” In this regard, we have observed that users are fortunately getting familiar with this type of scam and now report it in the Bitcointalk forum.

The pump and dump

“Pump and dump” is another strategy used by scammers, but it is not always immediately detectable at the beginning of an ICO. In this type of scam, investors and traders rush to buy the token at an early phase when the price is still low, and some even buy at a high price in fear of missing out on an opportunity to make an easy profit. Once the scammers complete the sales, the price drops abruptly and dramatically.

Crypto Ponzi schemes

A “Ponzi scam” is another category of scam observed. This type of scam typically requires that the victims invest in some product(s) or service(s) associated with the ICO and are promised returns at a later stage.

URL scams and phishing trips

We also observed a new tactic of scamming investors that involves the launch websites that are similar in name and design to existing projects. Naive investors that are unaware of the original websites may be fooled by these sites and lose their coins. This category of scam is identified as a “website scam” in our study.

We know what you did last night

We also observed what we describe as a “porn scam,” which seems to be increasingly popular among scammers, whereby an ICO pretends to offer premium access to its porn site (and/or products). Scammers may be employing this type of scam because users are less likely to report it due to pornography being prohibited or looked down upon in many countries.

Market manipulation and pre-mines

Next, we defined another form of fraudulent ICO as a “pre-mine scam,” referring to tokens being shared among developers and/or promoters after the final token sale took place instead of burning the unsold tokens as is appropriate in such cases. This scams investors simply because a higher token circulation supply implies a lower token price. Furthermore, the token’s market can be manipulated if developers retain a large portion of the tokens from the pre-mining phase. Interestingly, another recent study also found that pre-mining activity is linked to cryptocurrency defaults.

So what's the biggest ICO scam?

Our screening showed evidence that the “phishing and fraud” type of scam is the most common, whereby users receive spam emails, suspicious links and popups, questions for personal and financial details, errors on withdrawals, pending withdrawals, balances disappearing from wallets, and other dysfunctional operations.

Finally, using our plug-in estimator, we found that if an ICO business project turns out to be a scam, we can expect an estimated $54.1 million in losses, which is three times the general sample average of $17.58 million.

Summing up, due to a lack of regulation, developers and/or promoters can employ more than a dozen tactics to fool investors. The money involved in this new, emerging market is overwhelming. We argue that our findings have significant implications, including the need for ICO market regulations from governments and regulatory agencies to protect investors from severe losses.

The Chinese government is not a fan of initial coin offerings (ICOs) and it has made this very clear in the past. Now, in its latest move, it has signed a new decree that further clamps down on the sector. The decree outlaws ICOs, describing them as illegal fundraising.

China first banned ICOs in September 2017, a period in which they were extremely popular. At the time, the People’s Bank of China ordered all ICO issuers to cease immediately and refund their investors. However, as local news outlet 8btc reports, Chinese investors have found ways to still invest in ICOs.

With its new decree, the government is further seeking to stamp out cryptocurrency token sales completely. According to local reports, a State Council adopted the decree in a December 21, 2020 executive meeting. Premier Li Keqiang then signed the decree in late January, before unveiling it mid-February.

The decree outlaws ‘illegal fundraising’ which it defines as “the act of acquiring and absorbing funds from unspecified people and entities without the permission of the State Council’s financial management department.” It also deems illegal any fundraising that comes with a promise to pay out interest. This will include ICOs, initial exchange offerings (IEOs) and security token offerings (STOs).

The decree revealed that the government intends on cracking down on such illegal fundraising campaigns in their early stages. To do this, the government will establish a comprehensive system that monitors the digital asset industry and the traditional financial markets. Provincial-level governments will be in charge of cracking down on illegal fundraising campaigns in their jurisdictions.

Illegal fundraising constitutes a crime under the new decree, prosecutable under the standing criminal law.

Back in 2017, when China clamped down on the digital currency industry, it was believed to be a move to protect investors. However, some now believe that the government had the digital yuan in mind. The new decree also comes at a time when the digital yuan development is at high gear, further building on this belief.

In October 2020, the Chinese government passed a law that legalized the digital yuan but banned all rivals. Making or issuing any yuan-backed digital token is illegal in China, and could attract a fine equal to five times the proceeds.

China’s regulations have been emulated in other countries, further casting a shadow over the future of ICOs globally. One of the countries taking after China is India. It recently proposed a bill that bans all “private cryptocurrencies” while setting the stage for a digital rupee.

See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

A combination of factors, such as higher institutional investment in the cryptocurrency market, the NFT (non-fungible token) boom and the popularity of meme coins such as Dogecoin (CRYPTO: DOGE)  and SafeMoon (CRYPTO: SAFEMOON), has led to a massive number of new cryptos entering the market in 2021.

More than 2,655 new crypto assets were added to its database by data aggregator CoinMarketCap this year. Other platforms like CoinGecko and Coinpaprika added 3,064 and 2000 new crypto assets, respectively.

Let’s look at 7 of these upcoming ICO (Initial Coin Offering), IDO (Initial Dex Offering) and IEO (Initial Exchange Offering) that have promising concepts.

Polytrade

IEO: Aug. 16-17, 2021 IDO: Aug. 18, 2021

Polytrade is one of the upcoming platforms in the DeFi space that aims to revolutionize the future of trade finance. The blockchain-based protocol connects buyers, sellers, investors and insurers to provide various benefits such as timely investments, streamlined credit facilities and interest payments.

It will tokenize real-world invoices and bring them on-chain into the DeFi platform.

Escrow Protocol

ICO: Aug. 30 – Oct. 1, 2021

Escrow Protocol is a blockchain-based Web3 Oracle platform that lets investors fund startups with extensive control over their contributions.

Funds are put into escrow accounts and released according to pre-determined completion of project milestones. Moreover, investors receive interest payments through auto-staked yield farming, while their funds are held on the platform.

Creator Platform

IDO: Sept. 8, 2021

Creator Platform is a blockchain-as-a-service that lets businesses build dApps (DeFi, no-code smart contracts, NFT, or any applications), cost-effectively in a cutting-edge technology environment. Through the IDO, the company aims to raise $400,000 in total.

Quarashi Network (QUA)

ICO: Oct. 1 – Dec. 1, 2021 (Pre-sale through Sept. 1, 2021)

Quarashi Network will provide an extensive list of solutions with complete user anonymity and privacy, including an IDO Launchpad, multi-crypto wallet, airdrop, private chat and decentralized exchange. All solutions will be powered by the Quarashi Network token, QUA.

Eartha (EAR)

ICO: Oct. 26 – 31, 2021 (Pre-sale: Through Oct. 25, 2021)

Eartha is a DeFi platform that will let businesses of all sizes make escrow transactions easily. The project aims to create a B2B economic zone on top of the blockchain.

SMEs and start-ups will be able to make low-cost and decentralized escrow payments, rather than rely on intermediaries such as banks that charge a lot for business-to-business transactions.

ARNO

ICO: Dec. 6, 2021 – Jan. 31, 2022 (Pre-sale: Through Nov. 20, 2021) IEO: Aug. 16 – 22, 2021

The ARNO project aims to enable the creation of secondary energy sources for home and industrial usage, based on carbon-nano materials in lead-acid battery cells.

The ARNO token will fuel the entire economic ecosystem of the project, which can be exchanged for any major cryptos such as BTC or ETH on exchanges for real funds.

Grand Time (GRAND)

ICO: Aug. 17, 2021 – Aug.  16, 2022

As a decentralized and democratic eco-system for daily cryptocurrency transactions, Grand Time aims to attract more users into the market and make cryptos a mainstream asset class.

The platform will consist of many tools to make cryptos accessible to everyone, especially for people with no previous understanding of blockchain.

DeFi has little in common with the ICO boom aside from its fast rise.

Mike Curtis breaks down DeFi further to understand why it is not the new ICO.

Many ICO projects were built on top of Ethereum, making it a platform with an understandable use case.

2017 feels like it happened a decade ago for most people, but many of us still have vivid memories of it, especially those who invested actively in the past bull run.

The bull run of 2017/18 was a time like no other. One of the most memorable things about it was the so-called initial coin offering (ICO) craze, where new crypto projects promised enormous gains in a modest amount of time.

One would find it difficult to see the words “ICO” and “craze” being used separately. Two words almost became synonymous with each other, and for a good reason.

Fast forward to 2020/21, and we have another bull run and a new “hot thing” people want to get involved with — DeFi, or decentralized finance space.

The public drew comparisons between two entirely different things because of their meteoric rises. For that reason, I will briefly review how different ICO and DeFi are and why you shouldn’t put them in the same row.

The good, the bad, the ugly

ICO craze has a negative connotation among investors, mainly because it didn’t stick to its promises and left many early adopters hurt, leaving a sour aftertaste in their mouths.

But it wasn’t bad for all sides.

Many ICO projects were built on top of Ethereum (ETH), making it a platform with an understandable use case. The ICO phase was a transitional period in ether’s growth, and one could say a necessary experience.

Currently, ether’s rally plays a significant role in the surge of DeFi, and now they feed off each other. You could even say that without the ICO craze there would be no DeFi, but they are not the same thing. So what’s the distinction between them?

The first striking difference between DeFi and ICO revolves around the ease of entry. In 2017, it was challenging to participate in most ICOs, while today we have an entirely different setting with decentralized exchanges. The problem of entry is mostly solved, and this is what DeFi prides itself for — being open for everyone and trailblazing a new way of financial services.

DeFi has liquidity mining, yield farming, and liquidity pools replacing the traditional way of gaining interest. Some projects set unrealistic standards and project soaring APY returns that look too good to be true, giving the whole market a bad look. This is also not ideal, but it helped attract retail investors.

The massive growth of the DeFi platform as a whole is eerily similar to a lightweight car accelerating far beyond what its safety carcass can handle, but even then, it’s way different than the ICO phase and its “bubble” like substance.

As stated by Cameron Winklevoss, the co-founder of Gemini, in his September tweet:

“DeFi is not the same as the 2017 ICO craze. Back then, money was raised on sh*tcoin white papers written in coffee shops. DeFi is already living and working in the wild. Billions of dollars are at work earning positive yield. This isn’t hypothetical vaporware, this is real.”

The statement is pretty assertive, but the more popular school of thought claims that DeFi is due to a violent correction, similar to those ETH had in 2017.

How can DeFi dispute that claim?

It would make sense to break down DeFi further to understand why it is not the new ICO.

Let’s take a look at the “blue chips” of DeFi that have established themselves over the last year: Compound, Aave, Yearn.Finance, Uniswap, Bancor, Balancer, and Curve. Many of these projects already can be called successful, and they didn’t hit their potential yet, only scratched the surface.

DeFi created new forms of automated market making (AMM) that help raise funds for new projects, which no longer need to undergo the initial coin offering process. Today funds can be raised directly by selling coins in an initial liquidity offering, where projects use their tokens and ETH to create a liquidity pool. AMM protocols create a market for new crypto, and anyone can get the token without being a seasoned investor.

Unlike with the ICOs, DeFi investors can enjoy profits via both appreciation of assets and the use of DeFi’s yield farming.

Participants can constantly move their assets between different pools to gain higher interest. This fuels the DeFi market, but also admittedly conditions the space for wild “pump and dump” schemes, as seen with different “food tokens” like Hotdog, Kimchi, Sushi, among others.

DeFi adopters also have viable concerns about the sector’s status in terms of regulation enforcement, because as we know from history, they ended the ICO craze. It took the United States Securities and Exchange Commission long enough to enforce action against ICOs, even though it gathered a lot more attention from the public, judging by Google Trends. 

Compared to the ICO phase, DeFi is still an extremely niche subset of the crypto space, and people from traditional finance have a very vague understanding of it.

Despite that, the total capital locked in various DeFi platforms has risen to $34.86 billion, at the moment of writing this article.

The crypto space and DeFi are evolving

Google Trends metric can also suggest that DeFi is still in its infancy, at least popularity-wise. It has room for growth, even though it has far exceeded $5.4 billion raised by the ICOs in the first quarter of 2018.

Today, decentralized exchanges (DEX) are challenging centralized ones for daily volume. Those who trade on both types of exchanges can see DeFi’s long-term potential more clearly, and underline that this is only a start.

The majority of experts involved in the space endorse the emerging use cases and rapid innovations possible thanks to DeFi. Those who observe the situation from outside are taking a more skeptical view for how “bubbly” it looks. Most of DeFi’s problems have been associated with outrageous marketing campaigns and disingenuous developers, not its services as a whole.

Of course, a lack of oversight opens the door for different scams, leading inexperienced investors to invest funds into projects that are not fundamentally sustainable, but this is nothing new. This is one of the things technology wouldn’t be able to solve entirely.

The differences between the booms

But if we look a little deeper, we will be able to see the differences between the two booms:

While prices vary significantly, much of the volatility in DeFi can be traced back to a lack of liquidity based on a constrained supply rather than speculation or pumping and dumping.DeFi and its functionality can be examined and critiqued, something that wasn’t the case with some ICOs that resembled a free-for-all more than a marketplace and in some cases didn’t even have any product.DeFi gives lenders and borrowers complete control over setting their rates and requirements.DeFi asset values do not correlate with bitcoin (BTC) prices, which implies that assets derive their value from the functionality of the DeFi technology, not speculation.The majority of DeFi services are built to appeal to non-technical users, and designed to achieve mass adoption.

Finally, because DeFi is inherently decentralized, the sustainability of this boom is partially in the hands of the community. If we consider the network structure, build systemic trust and seek long-term value, the functionality and innovation of DeFi could create far more value for all of those involved.

We can say one thing with utmost confidence — the DeFi ecosystem requires retail investors as much as experts, it has clear value, and it has little in common with the ICO boom aside from its fast rise.

Like Mark Cuban poignantly pointed out, DeFi is more comparable to the early days of the internet, with new dApps appearing every day, despite the internet being around for ten years.