Cryptocurrency research firm BitMEX released a report today which offer some interesting insights into the initial coin offering (ICO) craze that has swept across the globe over the past 18 months.
According to BitMEX, approximately $24.2 billion-worth of cryptocurrency ended up in the hands of individuals and companies that issued tokens in the first place.
Assessing the value of the tokens isn’t easy. For one thing, there is the anonymity of transactions and the fact that there are so many different tokens to track.
On top of this, the cryptocurrency market has crashed in the past few months, meaning that, though the ICO tokens may have peaked in value at $24.2 billion, they are now probably worth around $5 billion.
According to BitMEX, around $1.5 billion worth of cryptocurrency was transferred away from firms that launched ICOs - implying that they may have cashed out.
All bad?
Now, this may make firms look bad, but that isn’t necessarily the case. After all, an ICO is designed to raise fiat cash that can then be used to fund and build a company.
Having said that, BitMEX’s report does highlight the total lack of transparency surrounding the ICO market.
Along with selling tokens, firms have been to able to issue themselves tokens and then go to exchanges and sell them.
Without any sort of legal oversight, this could mean that you could, as many crooks did, set up a company, launch your ICO and then run off with a load of cash.
As long as there is no legal oversight, it seems likely that this will remain the case - though regulators are certainly much more cognizant of the problems ICOs pose than they were a year ago.
In the meantime, anyone considering investing in an ICO would be best served to do their own due diligence. Otherwise, they may as well go throw their cash off a Bridge .
