Digital Currency ICOs
What are ICOs?
ICOs, or "initial coin offerings", are a method of online fundraising for open-source networks such as those created for cryptocurrency. In exchange for their contributions, investors receive digital coins.
In recent months, large sums of money have poured into ICOs. Reuters reported that ICOs have generated approximately $2.2 billion in 2017 alone and listed the following as the top 10 ICOs:
- EOS: $289 million
- Filecoin: $233 million
- Tezos: $232 million
- Bancor Protocol: $153 million
- Kik: $100 million
- Status: $95 million
- TenX: $83 million
- Press.One: $82 million
- MobileGo: $53 million
- KyberNetwork: $50 million
Within just hours of its Smart Token ICO, Bancor is reported to have raised $153 million; however, Bloomberg recently reported that Bancor has lost over 50% of value since the June ICO.
On December 11, 2017, the SEC Chairman issued a statement regarding cryptocurrencies and ICOs. The statement mentions key issues and areas of concern.
- "Crypto Influencers Pump Up Markets With $105,000 Tweets", Bloomberg, 6/26/18
- "Here's Why Investors Should be Wary of ICOs", Forbes, 6/10/18
- "ICOs - The Good, The Bad and The Ugly", Forbes, 5/31/18
- "Why Millenials Are At High Risk for Bitcoin & ICO Fraud", Forbes, 3/5/18
- "Backroom Battle Imperils $230 Million Cryptocurrency Venture", Reuters, 10/18/17
- "One of the Most High-Profile Initial Coin Offerings Has Crashed 50%", Bloomberg, 11/1/17
- "'Initial coin offerings' Present Dangers to Investors, New Challenge to US Regulators", Reuters, 6/13/17
Recently, a suit was filed against Ripple Labs Inc. According to an article in Bloomberg, the Plaintiff has alleged that the sales of Ripple's XRP tokens amount to an attempt by Ripple to raise millions of dollars by selling unregistered securities.
XRP tokens are just one of many digital currencies on the market today. Others include those mentioned above as well as Bitcoin, LiteCoin, SwiftCoin, Ether or Ethereum, Tether, and many more.
In recent months, questions have arisen such as:
- Whether digital coins should be registered and classified as securities
- Whether ICO participants have invested, purchased, or donated
- What the future looks like for digital currencies and whether ICO participants should be concerned
Should I be Concerned?
Although many, if not most, ICOs have the characteristics of securities as defined by state and federal securities laws, the majority of ICOs have not complied with the registration and disclosure requirements of the Securities Act of 1933. Investors participating in ICOs may be left with illiquid investments with little transparency and much risk.
Things to Consider:
- Have you been promised or guaranteed a return from your ICO investment?
- Did you "invest", or did you "donate"?
- Are you familiar with the required market regulations?
- Do you have questions or concerns about your investment?
If you have questions or concerns about your rights and options, contact us today. The call is confidential, and there is no cost for the consultation.
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