What is Initial Coin Offerings (ICO)? Is ICO a Scam?

What is ICO

Initial Coin Offering, commonly known as ICO is one kind of crowdfunding platform via use of cryptocurrency which is very much popular these days and which is done to raise the capital for the startup companies, but is unregulated. So, we don't recommend you to involve in any company which is unregulated because if some company is not under the control of any laws, then they can turn into scam anytime. On top of that, why we should choose the platform which legality is questionable when there are plenty of options to make money online, some of which even we have listed within our "Good and Trusted Online Works" section which you can find by clicking this link:- newsonlineincome.com/legitimate-work-home-businesses/

 

In ICO, companies sold new cryptocurrency to the investors and most of time they called it "token sale" or "crowdsale". Actually, the process of ICO is almost same like IPO (Initial Public Offerings), but instead of buying the shares of the company, investors buy digital "tokens" (new cryptocurrency coins) believing the value of those coins will rise in the future. This makes very high risk to invest in ICO because if the value of that coin doesn't increase, then investors gain nothing. However, most of the scam companies involve in ICO arbitrarily increase the price of those virtual coins and the owners of the company sell those coins when they think they have enough pumped the price of those coins and then left the company where as those members who buy those coins in high price will keep on holding the coins for long time thinking the price of that coin will rise more, but once the owner sell those coins, they just dump that company and members find out they have been scammed only after some years when the price of those coins never rise up. That is why these kinds of ICO scams are also known as "Pump and Dump" schemes. Actually, there are majority of scam companies which offered ICO and those which are believed to be the real ones, they also now believed to have resulted in considerable phishing, Ponzi schemes, and other scams.

 

Actually if we compare ICO with IPO, then the concept of ICO is scam in itself because it lets people to invest to raise the fund to start the company, but doesn't provide them the share of the company, instead just give them some coins. So, using the money of other people to start up company and not giving them the share of the company, but just some tokens in the name of cryptocurrency which are not even publicly tradable doesn't sound good because it is like using other people just for their own profit and gain.

 

Anyway, it is not only our thoughts, but now the concerned authorities have been already stepped inside this business. Recently SEC (The U.S. Securities and Exchange Commission) has issued a warning about potential ICO scams.


ICO complaints from regulatory bodies. ICO review. ICO SEC warning.

MasterCoin is the first company which started the idea of ICO (token sale) back in July 2013. After that Ethereum and KarmaCoin raised the money with a token sale in 2014. However, nowadays, there are lots of scams launching day by day in the name of ICO. Till August 2017, 400 ICOs have been conducted. Ethereum at the moment is a leading blockchain platform for ICOs with more than 50% market share. However, the Ethereum network ICOs have resulted in considerable phishing, Ponzi schemes, and other scams, accounting for about 10% of ICOs.

 

So, considering the growth of ICO scams, now government agencies have finally decided to step in it. SEC warned the investors about the risks of investing in public companies that promote ICOs and deliberately "pump" the prices of their offerings.

 

The SEC said in the warning:- "Fraudsters often try to use the lure of new and emerging technologies to convince potential victims to invest their money in scams. These frauds include 'pump-and-dump' and market manipulation schemes involving publicly traded companies that claim to provide exposure to these new technologies." SEC didn't only warn about ICOs, but also suspended the trading activities of some companies due to their ICOs, and those companies are First Bitcoin Capital Corp., CIAO Group, Strategic Global and Sunshine Capital. 

 

Not only SEC, but Chinese Financial Regulators also has banned people of China to invest in any ICOs and also had demanded that the proceeds from all past ICOs be refunded to investors. Prior to this banned, ICO had raised nearly $400 million from around 100,000 Chinese investors. However, Chinese national television has stated that the ban is only temporary until ICO regulatory policies are in place. But, we think they will keep on banning ICOs unless they are able to find out all ICO scams. Canada is also working on regulating ICOs.

 

 

Conclusion

We don't mean all companies offering ICOs are scams, but majority of them are. However, recently the concerned authorities are investing on scams and also trying to provide regulatory policies for the legit ICO companies. But, before these regulatory policies are finalized and guilty has been charged, it is better we stay out of these companies because why take a risk when there have other plenty of options to earn money online. But also if you want to take a risk by investing in the companies which offers ICOs, at least stay out of those companies which promises high rate of return in short period of time and those companies which haven't provided clear owner details because most of the time those companies turned into scam which owner details are hidden or not clear or those which offers unsustainable rate of return. Actually,  most of the coins which are offered by the scam companies never make their way to real cryptocurrency wallets or exchangers. So, another way to find out either those coins are real or not, just wait some more time until those coins are publicly tradable, not just inside the company itself. However, at the moment from our side we don't recommend you to involve in ICOs because we believe in working with those companies which business has been already regulated, which owner details are clear and which has proven track record of success such as, our No.1 recommended online work company known as Wealthy Affiliate. If you don't know what is Wealthy Affiliate and how it works, then you can find the details by clicking this link:- newsonlineincome.com/wealthy-affiliate-review/


Please feel free to share this ICO review (Initial Coin Offering review) with your friends and families to make them aware of ICO scams.



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