Mycelium's "crowdsale": basically a donation, not an investment by any means

[alani123]

So Mycelium is organising a "crowdsale". If you've been in their website you've most definitely heard about it because they're doing their best to get the word out. I'm here to give you the hard truth though, this is quite possibly the worst place to put your money in and most certainly a guaranteed loss of principal. Don't give them money unless you consider it a donation. Here's why:

Part 1
Unacceptable practices:
Giving a 10% discount to people expressing interest prior to the sale.
You don't have to be a genius to see how bad of a practice this is for securities (note: this crowdsale isn't even a security) that are supposedly representing a stake in a company.

Promising investors part of the money received from future crowdsales
In their own words:

You get the share of Mycelium and the right to receive money whenever Mycelium gets more expensive. Let's suppose that this time, with this crowdsale, it will be valued at 100 million USD. Imagine that when we sell another portion one year later it will be valued at 1 billion USD. So you will get 900 million USD multiplied by your portion (if you are the owner of 5% you will get 5% of 900 million = 45 million). Your initial investment stays with you: you keep owning this right and it is non-dilutable. The next 20% we sell will be dilutable.

Remember that a Cyprus-based holding company is involved, and Mycelium operations are supposedly Latvian-based. This is a borderline pyramid scheme setup and illegal for securities in most of the world.

Absolutely zero legal fallback

There will be no refunds. Token is not a security, is not listed, authorized, issued or traded on any regulated market.

No ETA on project rollout
and the creators have no clear idea how it's going to be built or even what it's going to be. You're you would literally be buying a stake in vapourware.

Mycelium's supposed address is a rent-a-desk service's address.
part 2
Why this has a high chance of being a loss:
First things first, up to this point, could you name anything that Mycelium did that was a commercial success? Their wallet software was free and not monetized, which is nice for users but not for potential investors. A supposed advantage of this crowdsale is dividends but there's no talk about how they're going to turn in profit.

They are granting themselvs the right to repurchase shares at the initial price.
There's no clear plan on how this project is potentially going to turn in profit, but even in the unlikely event that the project becomes profitable, they could buy back the shares at the initial price and end their obligation to investors.

Can only invest in the wallet but there's no guarantee that the money will be spent on it instead of other projects (that Mycelium won't pay investors dividends for)

And do I have a guarantee that the collected funds will only be used for the wallet project and not for the rest of the company?

Not entirely, but that's mainly because eventually all of the rest of our company will be rolled into this wallet. Most of the expense will be used to pay Wallet developer salaries, but some of our resources (like office and general brand marketing) are shared, so it would be difficult to keep completely separate. Sorry I can't give a more satisfactory answer.

Tokens are released in their own platform.
So fair distribution is entirely based on trust, as well as trading. Yet they claim that Token owners can either sell them on the open market at any moment or redeem to us if conditions are met, which is misleading at best.

Especially risky when you look at this from a legal perspective:

You're a US citizen, right? Where's your company based/registered at?

For now yes. It's not my company, I am technically just a contractor. It's registered in Cyprus, with the Wallet division registered in Latvia.

My advice on this would be to stay away. It looks bad in every way possible, there's no guarantee that Mycelium have the supposed platform ready or even that they're working on it. Don't fall for their misleading advertising, this looks bad no matter how you look at it. Only send money if you consider it a donation.

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[cjmoles]

Thanks for the affirmation....This is exactly the way I see it too.  But, what's so confusing to me is that they seem to be serious!  Their crowdsale terms don't make a lick of sense from an investor's point of view, or from any angle for that matter, but is there anything at all in their offer that might justify an investment rather than a donation?  SMILE--I'm thinking about donating out of pure confusion but can I at least expect a t-shirt, coffee mug, or something for my support?  I guess what I'm asking: is it a pure scam or is it a genuine project?

[bitbite111]

Pure money grab on the heels of all these icos. Reminds me of the dot com bubble.

[Anon_7716]

So glad that there's someone who gives an offer to do a donation, but that makes me puzzled is why you are not giving a support/gifts to donors to support your activities..??, can you provide real evidence for these activities so that I could trust this.

[Monnt]

But as mycelium has stated, they are aiming to become a full blown finance company. Their fees should be able to fund their dividends.

[Anon_7716]

But as mycelium has stated, they are aiming to become a full blown finance company. Their fees should be able to fund their dividends.

I am very happy if it could come true, but is later after the company became a financial firm mycelium full blown will remain committed to its investment ..??,

[Bit_Happy]

You get the share of Mycelium and the right to receive money whenever Mycelium gets more expensive. Let's suppose that this time, with this crowdsale, it will be valued at 100 million USD. Imagine that when we sell another portion one year later it will be valued at 1 billion USD. So you will get 900 million USD multiplied by your portion (if you are the owner of 5% you will get 5% of 900 million = 45 million). Your initial investment stays with you: you keep owning this right and it is non-dilutable. The next 20% we sell will be dilutable.

I get $45 Million USD!
Good quote, which clearly shows they are speaking to people who fall for Ponzi schemes.

[Wendigo]

The one thing that puts me off is the fact that we are not buying any shares in their company and not even 'real' shares in their Mycelium Wallet but we are getting fantasy tokens instead which are not traded on any stock markets whatsoever. How can be sure that we could sell these tokens to anyone later on for a profit? What if Mycelium starts buying back all the tokens for cheaper than we have bought them? I mean all this crowdsale can go south very fast for the investors. I think I am going to stay away from this one.

[manav1112]

You get the share of Mycelium and the right to receive money whenever Mycelium gets more expensive. Let's suppose that this time, with this crowdsale, it will be valued at 100 million USD. Imagine that when we sell another portion one year later it will be valued at 1 billion USD. So you will get 900 million USD multiplied by your portion (if you are the owner of 5% you will get 5% of 900 million = 45 million). Your initial investment stays with you: you keep owning this right and it is non-dilutable. The next 20% we sell will be dilutable.

I get $45 Million USD!
Good quote, which clearly shows they are speaking to people who fall for Ponzi schemes.

Exactly what I thought, sounds like a typical Ponzi scheme type thing!

[alani123]

But as mycelium has stated, they are aiming to become a full blown finance company. Their fees should be able to fund their dividends.

That's if you trust them. Normally when buying securities a third party is responsible with trading and distribution, in Mycelium's case you'd also have to fully trust them with that. Their crowdsale doesn't even have to abide to regulations because it's not a security, there's no fallback if they try to defraud investors.

Thanks for the affirmation....This is exactly the way I see it too.  But, what's so confusing to me is that they seem to be serious!  Their crowdsale terms don't make a lick of sense from an investor's point of view, or from any angle for that matter, but is there anything at all in their offer that might justify an investment rather than a donation?  SMILE--I'm thinking about donating out of pure confusion but can I at least expect a t-shirt, coffee mug, or something for my support?  I guess what I'm asking: is it a pure scam or is it a genuine project?

There's no way for me to tell if it's a pure scam from now since they haven't even released their shares or product. It seems bad though and that's why I recommend not putting money you can't afford to lose in that initiative. However, this might as well be a legitimate project but the potential of it to be profitable enough to be a decent investment also doesn't seem good. I believe the marketing from Mycelium is trying to mislead people into giving them more money instead of asking for donations.

[Bitware]

Agreed. This has scam written all over it. If they want to sell shares, then do it right and sell actual shares through the proper channels as negotiable securities.

[elasticband]

i was shocked to see my favourite mobile wallet touting

[_Victory_]

I have not yet decided if I will get involved with this one. It a pretty big name, but it has a lot of negatives...

[DimensionZ]

I have decided to stay away from this one. I don't like the idea of buying digital tokens for something like their Mycelium wallet which is not even stocks of a real company. And I don't know how they can put a worth of $100 million to $900 million on something that is basically free for everyone to use. What am I missing here? It looks like a get rich quick scheme that can blow up in our faces.

[alani123]

Somebody shared the original crowdsale pdf with me privately. I've uploaded it to archive.org
https://ia601503.us.archive.org/23/items/Mycelium_crowdsale/crowdsale.pdf

Comparing the two documents programmatically is hard because the later update of the PDF was styled with a different pdf editor and contains proper line breaks whereas pasting the first one in an editor results to it having 1800+ lines. I'll try reading them to do an analysis when I have time.

[manav1112]

Somebody shared the original crowdsale pdf with me privately. I've uploaded it to archive.org
https://ia601503.us.archive.org/23/items/Mycelium_crowdsale/crowdsale.pdf

Comparing the two documents programmatically is hard because the later update of the PDF was styled with a different pdf editor and contains proper line breaks whereas pasting the first one in an editor results to it having 1800+ lines. I'll try reading them to do an analysis when I have time.

Thanks for the file as well

[MingLee]

I had a feeling it was a series of donations, and I'm glad that I didn't think twice about buying into this.

If they could get the bloody thing out sooner, then maybe people would be more interested in ""investing"", but that doesn't look like it is anytime soon and chances are they will be pressed for funds.

[Quickseller]

I haven't really looked very closely at the crowd sale, however I have glanced at a few articles and read some headlines, and my impression was that it was most likely some kind of donation solicitation.

If you use Mycelium on a regular basis (and benefit from their product/wallet) then I would suggest that you donate/"invest" in order to give the devs some kind of incentives to continue their work on Mycelium.

A similar principle for armory is true as they (at least previously) accept donations to support the development of armory.

I personally use (and recommend) electrum and would most likely donate to thomasv if he/electrum accepted donations.

[manav1112]

Make it look nice like half the people on crowdfunding sites do, and then people think its legit and invest.

Simple!

[bassmaster]

How is this setup any different than Ethereum, Lisk, or Waves ICO's ?

Ethereum was selling ETH tokens used to pay for smart contracts on the platform.  It's true that the platform wasn't built till later, but Vitalik Buterin had a fantastic reputation for contributing to the Bitcoin community and for his technical competence.  If someone believed that Ethereum would later become a success, then the value of ETH would rise accordingly as the "fuel" of the platform.

These "Mycelium tokens" have no use outside of speculation/donation.  There is little reason to think the wallet will make a profit, but even if it does, there is no reason for the value of these tokens to rise accordingly.  If there was a direct tie between profits and dividends, then there might be a thin thread connecting the two, but I didn't see any.