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Saving ICOs from Themselves
ICOs have transformed the startup fundraising ecosystem. A tech startup today can raise funds more quickly and easily through a token sale than traditional venture capital funding. In 2017, ICOs raised over $5.6 billion, accounting for 30% of all seed funding.
But while this quick and relatively easy fundraising method has allowed many promising projects like Ethereum to raise the funds to allow them to prosper, it’s also lets scams flourish.
Scams & Fraud
ICO investors today are at high risk. Many scammers and fraudsters today create an ICO website and setup a token sale with no intention of creating a working product. Instead they intend to run away with the funds as soon the funds are raised. Statis Group has estimated over 80% of ICOs today are scams.
Recognizing the danger to their users, Facebook, Google and Twitter have all announced bans on ICO advertising, to protect users from scams and phishing attacks. The SEC has shut down several ICOs, forcing them to return funds to investors.
Regulatory Risk
Governments have recognized the risk of securities fraud with ICO projects, and there have been crackdowns on ICOs around the world. In America, the SEC has classified most ICOs as securities, barring ordinary investors from participating. In China, ICOs have been outright banned.
For legitimate startups trying to raise funds for development, the current environment of regulatory risk and uncertainty makes it hard to raise funds through a public token offering.
Opaqueness
The projects which are still going forward with token sales are moving much of their fundraising to private presales which have less regulatory risk for the company. But these private presales are opaque and often creates more risk for crowdsale participants.
Creating a Healthier Token Sale Ecosystem
The market needs better due diligence and oversight, as well as better investor protection. To create this kind of environment, we’re introducing the Accredited Coin Offering(ACO) Platform — a way for the market to self-regulate token offerings.
We’re working with institutional partners including banks, accountants, and insurance companies to provide due diligence, credit ratings, and insurance for token offerings.
This keeps the token sale market healthy, eliminates scamming, fraud and unethical deals, and allows true entrepreneurship to flourish and drive success for the new token economy.
To find out about the ACO Platform and our vision for Accredited Coin Offerings, visit
www.acoplatform.com
