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46{d433fa1c024495e3d30fb9a8ae174a80907308b9b8a5f0e72f30e7e693d34bc9} ICOs were launched without a Proper Working Plan-Reveals a new study

46{d433fa1c024495e3d30fb9a8ae174a80907308b9b8a5f0e72f30e7e693d34bc9} ICOs were launched without a Proper Working Plan-Reveals a new study

46{d433fa1c024495e3d30fb9a8ae174a80907308b9b8a5f0e72f30e7e693d34bc9} ICOs Were Launched Without A Proper Working Plan-Reveals A New Study

ICO rating, an Amsterdam-based company that specializes in rating ICOs, informed that in the first quarter of 2018, 412 projects were able to raise $3.3 billion on a global scale. The figures suggest a 5 percent rise in the raised capital in comparison to the last quarter of 2017. But, the most staggering information revealed that 46 percent of the companies that launched ICOs have not been able to develop since their proposal.

The research was titled as ‘ICO Market Research Q1 2018” which calculated the total amount raised by ICO projects to be at $6.14 billion. It also informed that only fifty percent of the total companies were able to raise more than $100,000 through their ICOs. The sample size did not include TON project or Telegram ICO even after it managed to collect $1.7 billion. It was also reported that many companies did not participate in the research as they do not disclose their internal management and operational structure. Nine firms also closed down even after being successful in their ICOs launch.

It should also be noted that many countries around the world have a negative outlook towards ICOs as they do not consider it a legal source of raising funds because issued tokens are not securities. Also, more than one-fourth of the companies did not have a legal existence when they proposed their ICOs.

In a December 2017 statement, US Securities and Exchange Commission ChairmanJay Clayton, said, “A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation.”

He added that no ICO offerings had been registered with the SEC till now. Also the SEC “has not to date approved for listing and trading any exchange-traded products (such as ETFs) holding cryptocurrencies or other assets related to cryptocurrencies.”

In order to conduct a legal ICO, a company would have to develop the offering through a Regulation D exempt just like companies that produce physical products.

Last year, Munchee Inc. Was ordered by SEC to suspend its ICO as they regulatory authority was suspicious about the registration concerns surrounding the company. The company was then asked to reimburse the capital back to the investors.

In January 2018, SEC also suspended ICO launched by Arise Bank for a decentralized bank which valued at $600 million.

The official statement of SEC informed that ICO are illegal offerings as they are not registered nor “is there an applicable exemption from registration.”

Ernst and Young came out with a report which revealed that hackers were able to steal 10 percent of the total ICOs raised by companies.

Data suggested by the research companies clearly describes the current situation in the crypto space. ICOs were seen as a magic wand that did raise a tremendous amount of capital, but very few had the capability to handle and manage such sums of money. Now, some investors are stuck, and the authorities continuously wonder as to what can be done to curb these practices.

About the author

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Sean Halverson

Sean Halverson knows an emerging opportunity when he sees one. He's gone big into cryptocurrency. He has been contributing towards ICO Advisory and Start-Up since a couple of years. With his experience, he decided to study the cause and effects of fluctuations in the cryptocurrency market and to share his knowledge with the crypto enthusiasts.

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