Though cryptocurrency prices have plummeted since the beginning of 2018, the slowing momentum hasn't stopped initial coin offerings (ICOs) from being introduced. According to statistics compiled by CoinSchedule, to date in 2018 there have been 546 ICOs so far, for a total of a bit more than $12B in capital raised.
For many, the allure of getting into the digital coin market early and riding the next potential higher still has significant appeal. And who can blame them. For investors who got in at the ICO price for such highly capitalized alt-coins as , and and stayed the course, the returns were heart-stopping—271,333%, 150,343% and 124,161% respectively, as of writing.
But of the asset class remains fluid globally and investor protections can be spotty depending on where the offering is based. As well as outright scamming and purely fraudulent offerings, as the environment matures, investors are also encountering an array of unexpected fallout—everything from conflict between cryptocurrency founders and the foundations set up for a token's benefit, to developers breaking loose in order to launch their own version of a digital currency on which they previously worked.
Are there red flags an ICO investor can pinpoint, in order to steer clear of messy or even downright criminal offerings?
The best ICOs come very close to traditional venture investments says Andrea-Franco Stöhr, CEO of Crypto Finance Conference. The industry itself has made this possible he points out. Platforms such as Coinlist and ICODrops, exchanges that enable blockchain-powered projects to raise funds in the most compliant way possible—providing information, transparency and even ratings on an ICO itself—make it easier for investors to find relevant information, even as the SEC and other regulators slowly finalize their legal frameworks.
Well known VC firms are also smoothing the way for private investors to participate...