ICOs Sold 160,000 Ethereum Over the Past 10 Days

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In the past 10 days, Initial Coin Offering (ICO) projects have sold three times more Ethereum (ETH) than they did in August, according to research by TrustNodes published September 13.

The 160,000 Ethereum tokens sold over the past few days amount to $33 million, according to the price index at press time. Per TrustNodes, ICO projects sold 82,000 ETH on September 4, which was followed by a sharp decline in crypto markets.

Average daily ETH sales from ICOs varied from 1,000 to 5,000 coins in August, with occasional sales around 10,000 ETH. In contrast, the same amount of 10,000 ETH became a far more common daily sales volume in September.

According to TrustNodes, the total amount of Ethereum sold by ICOs over the past 30 days now amounts to 283,000 ETH, which is almost $60 million at press time.

Citing crypto data provider Santiment, TrustNodes states that the highest share of ETH sales from ICOs is attributable to the Digix ICO project. Digix’s paper value Ethereum holdings amounted to $150,000 million, which is significantly higher than the current total market capitalization of DigixDAO coin, which is $69 million at press time, according to Coinmarketcap.

Earlier this week, Cointelegraph reported that funding for ICOs have seen its hardest decline in 16 months. In August, ICO startups raised $326 million, the smallest amount since May 2017.

Ethereum-based ICOs have been outlined as the main factor for the recent ETH price decline, as some projects withdraw their funds in order to cover costs amid concerns over a bearish market. Today, Ethereum skyrocketed almost 20 percent with an intraday high of $214.18, after plungingbelow $170 earlier this week, its lowest point in 2018.

Also today, Sonny Singh, the CCO of global crypto payment processor Bitpay, argued that altcoins “will never come back” to their previous levels. Singh said that institutions adding financial products like crypto ETFs will be the main drivers of a bullish trend in the market and they are “not going to launch altcoin products, they’re going to launch Bitcoin products.”

An international task force targeting securities violations in the cryptocurrency industry has now opened active investigations into more than 200 initial coin offerings (ICOs) and investment products.

First launched in May by the North American Securities Administrators Association (NASAA), “Operation Cryptosweep” has already brought 47 enforcement actions against ICOs and firms offering cryptocurrency investment products in the U.S. and Canada, earning praise from Securities and Exchange Commission (SEC) Chairman Jay Clayton in the process.

“State and provincial securities regulators are committing significant regulatory resources to protect investors from financial harm involving fraudulent ICOs and cryptocurrency-related investment products and also are raising awareness among industry participants of their regulatory responsibilities,” said NASAA President and Alabama Securities Commission Director Joseph P. Borg.

He added:

“While not every ICO or cryptocurrency-related investment is a fraud, it is important for individuals and firms selling these products to be mindful that they are not doing so in a vacuum; state and provincial laws or regulations may apply, especially securities laws. Sponsors of these products should seek the advice of knowledgeable legal counsel to ensure they do not run afoul of the law. Furthermore, a strong culture of compliance should be in place before, not after, these products are marketed to investors.”

Eleven of those enforcement actions have been levied by regulators in Texas, with the State Securities Board reporting that it had halted schemes “in which companies claimed to have raised billions of dollars from investors.”

Joseph Rotunda, director of enforcement at the Texas State Securities Board, said an in emailed statement that the investigation had turned up a “staggering” amount of illegal activity in the cryptocurrency space, ranging from ICOs that had deceptively used the likenesses of actress Jennifer Aniston and Supreme Court Justice Ruth Bader Ginsburg in their marketing materials to investment promoters who had used stock videos to make it appear like the company was running three cryptocurrency mining farms.

He concluded:

“The work is far from complete, but state and local regulators will continue to conduct sophisticated investigations and bring appropriate enforcement actions to promote confidence and security in the market for investments tied to cryptocurrencies.”

Within a period of two weeks, from August 1 to August 14, the price of Ether, the native cryptocurrency of the Ethereum network, dropped by 44 percent.

In 14 days, the price of Ethereum plummeted from $470 to $260, reaching its lowest point in 2018 by falling below the $300 mark for the first time since early November, 2017.

The entire cryptocurrency market experienced a steep decline in valuation, losing nearly $150 billion of its valuation in a month. But, Ether, which performed particularly well against the US dollar amongst other major cryptocurrencies like Bitcoin and Bitcoin Cash, quickly became one of the worst performing digital assets in August.

What Fueled the Drop of Ether?

Today, on August 14, even after suffering such a large drop in price, Ether dropped 18 percent of its value against the US dollar, declining from $300 to $260 within a 12-hour span.

While other cryptocurrencies did experience major drops in value, Bitcoin for instance, only lost 6 percent of its market cap against the US dollar.

Throughout this week, many analysts including Eric Wall, a lead cryptocurrency researcher at fintech company Cinnober, stated that blockchain projects which raised hundreds of millions of dollars in Ether in the past 12 months dumped the digital asset on the public cryptocurrency exchange market, creating a domino effect across major exchanges.

“The problem when you give millions of ETH to ETH competitors is that they can unload the ETH on the spot market and short ETH on the futures market before that, so they’re not only securing the funding but also manipulating the underlying spot market in favor of their shorts,” Wall said.

It is important to acknowledge that the amount raised by ICOs in their token sales do not necessarily mean new capital coming into the market but rather existing capital stored in major cryptocurrencies like Bitcoin and Ether moving to ICOs.

Hence, if ICO participants allocate millions of dollars in Ether to token sales, and the developers conducting the token sales dump the capital raised in Ether on the cryptocurrency exchange market, it indirectly becomes a massive sell order.

Consequently, the Ethereum exchange market has suffered in the last three months, as ICOs continued to dump large amounts of Ether on the market.

BitMEX Shorts All-Time High

This week, Arthur Hayes, the CEO of cryptocurrency exchange BitMEX, revealed that in merely a week, BitMEX became the largest exchange for ETHUSD trading, as its 50x leveraged ETHUSD swap has evolved into the most liquid Ethereum trading pair in the global market.

Given the overly strong downtrend of Ether and the rest of the market, it is evident that the increase in the activity of ETHUSD trading pair hosted by BitMEX demonstrates a rise in the number of shorts placed by investors that have lost confidence in the short-term trend of Ether.

While it is difficult to conclusively state that ICOs led the price of Ether to crash, it is obvious that the liquidation of the capital raised by token sales played a major role in creating a strong downtrend for Ether.

 

American investment banking giant JPMorgan Chase is pursuing a patent for a distributed system that uses blockchain technology to issue virtual depository receipts that sound suspiciously like initial coin offering (ICO) tokens.

JPMorgan Wants to Host IPOs on a Blockchain

The patent application, filed by JPMorgan in January and published by the U.S. Patent & Trademark Office (USPTO) on Thursday, outlines a method whereby users on a distributed network such as a blockchain can tokenize assets and trade these virtual depository receipts.

To create a security token, an originator such as an asset owner or broker will encumber the asset by entrusting it to a qualified custodian, who will then authorize a virtual receipt for the deposited assets.

This virtual depository receipt would essentially be a security token, regulated under the authority of the U.S. Securities and Exchange Commission (SEC) or other local securities regulators. This designation would necessarily restrict how and where the tokens could be traded.

Depending on the nature of the asset, a token holder would also be able to redeem the receipt for the underlying asset by transferring it to the custodian, who would then cancel the tokens.

Notably, JPMorgan believes that one use case for this proposed system is to allow companies to hold initial public offerings (IPO) in a blockchain environment, more or less fulfilling the ultimate promise of the initial coin offering, though it is doubtful both that the firm would ever acknowledge that fact or refer to such token distribution events as ICOs.

Obligation-Backed Receipts

The patent also notes that the tokens could represent obligation-backed virtual receipts, more commonly known as debt equity.

This is not the first time that JPMorgan has mulled creating a platform to issue debt on a blockchain. Earlier this year, the firm partnered with the National Bank of Canada and a group of other firms to simulate the issuance of a $150 million Yankee certificate of deposit (CD) on Quorum — JPMorgan’s Ethereum-based enterprise blockchain platform — in parallel with an actual CD issued through conventional means.

“One of the mandates of the J.P. Morgan blockchain program is to identify how blockchain technology can create value, efficiency, and a better experience for our clients across the financial markets value chain,” said Christine Moy, JPMorgan’s blockchain program lead, at the time. “ We look forward to exploring blockchain-enabled capital markets applications, how these types of transformative opportunities can benefit our clients and counterparts.”

While JPMorgan has been generally hostile toward cryptocurrencies — CEO Jamie Dimon, many will remember, once routinely referred to bitcoin as a fraud — the firm has for years been a leader in the development of enterprise blockchain applications, which seek to capitalize the benefits of distributed ledger technology (DLT) in a private, permissioned environment, most notably through its development and promotion of Quorum.

The cryptocurrency industries largest crypto mining company, Bitmain, just opened their new office in Silicon Valley ahead of its planned Initial Public Offering (IPO) later in the year.

According to the Silicon Valley Business Journal, the China based cryptocurrency mining hardware manufacturer moved into a 20,000 square foot office space in downtown San Jose California. The company filled the last vacancy of the city’s Riverpark Towers office building, which is known to be the hub of tech startups like Cohesity, Okta, and WeWork.

The expansion of Bitmain’s company is not surprising after the firm was recently valued at over $12 billion following the end of last month’s $400 million funding round. This makes it the most valuable cryptocurrency company in the world as well as the most valuable privately held tech startup.

Cryptocurrency companies have centered themselves around the same geographic locations as other tech industries. This recent move will better position Bitmain to expand and manage its digital empire. The company has been targeting expansion into the United States and Canada due to the industry’s uncertain future in China. The company has currently opened mining centers in both Washington state and Québec , Canada.

Bitmain has started investing in other tech startups, so it’s moved to Silicon Valley would naturally benefit its investment capital arm of the company.

The crypto mining company recently led a $110 million funding round for well renowned cryptocurrency trading desk, exchange, and investing app Circle.  Bitmain has also announced that they plan on creating a USD pegged stablecoin in the near future.

Recently, Bitmain invested $50 million in the Opera web browser, which allowed it a controlling stake in the company. Shortly after the investment, the company announced that it would integrate an Ethereum wallet into their web browser.

Just this week, Bitmain also funded a round for the launch startup Block.one (creator of EOS cryptocurrency), alongside PayPal cofounder Peter Theil. The investment capital size was not announced publicly.

 

A recent study prepared by the Statis group ICO advisory firm identified that over 80% of ICO’s in 2017 were scams. The study examined the lifecycle of these ICO’s from the initial proposal of sell to the mature phase of trading on a cryptocurrency exchange.

The research revealed that over 70% of the ICO funding went to higher-quality projects, while over 80% of the projects were identified as scams. This study labeled an ICO death as “not listed on exchanges for trading” and “not updating code within their Github contribution page for over three months”.

According to the research, total ICO funds raised from these companies in 2017 amounted to $11.9 billion. 11% of the ICO funded ($1.34 billion) went towards scam these scam coins. The vast majority went to larger scam projects like Pincoin ($660 million), Savedroid ($50 million), and Arisebank ($600). The three ICO’s alone equaled $1.31 billion. While a larger number of ICO’s were scams, they received little funding as compared to the industry as a whole.

Techcrunch released another report earlier this year from Coinopsy and Deadcoins, which discovered that over 1000 cryptocurrency projects are already dead as of June 30, 2018. According to the Coinopsy list, there were 247 dead coins, while Deadcoins contained a 830 “dead list” of cryptocurrencies.

These cyber security company Carbon Black, conducted research in June of roughly around $1.1 billion worth of digital currency which was found stolen in the first half of 2018. The security company stated that cyber criminals take advantage of the dark web in order to initiate large-scale cryptocurrency theft. Estimated reports showcase 12,000 marketplaces and 34,000 offerings associated with crypto theft that hackers took advantage of.

The consulting firms PwC and Swiss Crypto Valley Association released a report showing the volume of ICO’s between January and May 2018. The report shows that $13.7 billion worth of ICO funding has already been accumulated, which is twice as much as the entire year of 2017.

 

The crypto evangelist and antivirus mogul, John McAfee recently tweeted that he’ll no longer be promoting initial coin offerings (ICOs) due to threats from the SEC.

 

McAfee revealed back in April that he charged $105,000 per tweet in order to promote crypto projects. When asked if McAfee felt responsible for pump and dump schemes which occasionally follow a few of his endorsements he stated “absolutely not”.

In May, McAfee made an announcement that he will release his own fiat currency backed by cryptocurrency. This currency would be redeemable for face time with him of up to 100 minutes of his personal time from any location in the world. He goes on to state that the promissory notes will be connected to a blockchain utilizing tokens.

McAfee has also hit recent headlines where he announced earlier in June that he would run for the 2020 presidential election as a way to serve the cryptocurrency community. He stated in one of his tweets

 

If you’re new to ICOs (Initial Coin Offerings), you might be wondering what all the hype is about. ICOs are events in where creators of a particular token offer a partial supply to investors in order to further the development of the coin. In turn, this will give the ICO team enough money to fund more future developments and increase the value of the new coin. This, in turn, will create more interest with potential investors and increase the coins value even more.

By investing in an ICO within its early stages of development, you can get a much better investment price (think early bird special), which will lead to a much better return on investment if the coin eventually increases in value through further developments. ICO companies have been doing a great job in getting people to participate in these “pre-released cryptocurrencies” through solid marketing exposure, well thought out whitepapers (layout of future plans for the crypto coin), as well as a reputable development team.

making-money-with-ico-investments-cryptocurrency-crypto

Now that you have a better understanding of what an ICO is and how lucrative they can potentially be, you might be tempted to invest in the next one that crosses your path. At first glance, any particular token might seem like a great investment. However, it’s been proven time and time again that investing in less reputable ICO’s can be very dangerous to your overall investment capital. In fact, there are many ICOs that are flat out scams.

For example, the Mycelium ICO failed because the creators were using the development funds primarily for travel. Another example would be CoinDash, in which the entire network was hacked right before one of their events. This only proved that CoinDash’s security could not handle such a large event. Potential investors for that ICO would have had their money stolen. So now you might be asking yourself, how exactly do I know which ICO to invest in?

I’ve created a nice checklist of factors that you want to run down the next time you start shopping for potential investments in an ICO. Print this out and have it closed by once you start to shop around.

10 Tips to Investigate Before Investing in ICOs

1. The Team Behind the Cryptocurrency

ico-a-team-crypto

Behind every successful ICO is a team of highly dedicated developers creating and managing the coin. Without a great team, the ICO is just another random coin to add to the 100+ piles of useless shitcoins out there. If you want to invest in a new coin, you first need to know who the people are behind it.

Some of the developers are well known in the tech world.  Have they had contributions in other cryptocurrencies before? The key here is to know who the developers are so that you’ll know whether a coin is worth investing in or not. Acquire a list of developers and Google them.

It’s pretty easy to do, simply run a few background checks on high profile individuals. This will allow you to check how credible or trustworthy your potential investment is. If the team of developers are comprised of a group of noteworthy people, then the coin has a higher chance of success.

2. Feedback on Bitcointalk.org

What is Bitcointalk.org, you ask? Why, it’s only the largest cryptocurrency forum on the net. If you want to get feedback on a particular ICO, then this is the place to go. You can see what other investors have to say about a particular ICO. You may also leave some of your own feedback for them to view. It’s basically a huge discussion board for people who are interested in talking about any particular cryptocurrency. It is also one of the best places for you to do your initial research.

3. Progress of the Development

Other than reading feedback on what other investors have to say about an ICO, it’s also good to do your own research (DYOR)  on the ICO’s  development stages (AKA Whitepaper). Investigate to see what information is already available to the public. The whitepaper is a crucial part of the research process as it contains all the key information about the coin. It contains all past, present, and future plans of the company.

However, you have to look beyond the whitepaper and see what else they have to offer. Do they offer prototypes for testing? Does it contain other useful information that is essential to investors? How far have they gone in developing the coin? Obviously, the more information that they release to the public, the more credible they are. This means that there’s a high chance of success for the company and high probability of profit for investors like you.

4. The ICO Community

ico-community-of-nerds-crypto

You can tell how much confidence is placed in a coin by looking at the size of the community. The value of a coin is dependent mostly on the supply and demand. Every cryptocurrency has a certain supply of coins that will slowly be released to the public.

While the supply is maintained by the developers, the demand has to come from the community. If the size of the community is really large, then you can easily determine that there is most likely a high demand for it as well.

It also helps if there are more prominent or reputable names investing in the coin. If the demand is high for standard investors as well as high profile ones, you know that the coin is most likely worth investing in.

5. The Purpose of the ICO

When you invest in a security or investment medium, you want to place your money in something that has value. With regard to cryptocurrency, the value lies in the purpose of the coin or what it’s used for (you can find this in the whitepaper).

For example, the purpose of Bitcoin is to enable people the ability to transfer money without any involvement of third-party entities such as payment facilities. Ethereum, on the other hand, was used for smart contract functionality.

As you can see, each coin has its own purpose. You have to find out whether the purpose of the coin you want to invest in actually makes sense or not. If you think it’s something that people can really use and get behind, then it’s investment potential increases. However, if you and others within the crypto community deem the coin useless, it’s most likely not a great investment opportunity.

6. Distribution of the Coin

Another thing to take note of is the distribution volume of the coin. If it happens to be more than 50% during the ICO, then you may want to think twice about investing. A credible  ICO will only have a certain volume of distribution as to not over-saturate the market. The key here is to find an ICO that doesn’t release all of its coins at once and instead releases the coins slowly into the market.

7. The Cap of the ICO

The cap refers to how many funds are allowed to be accumulated by the developers. If an ICO allows a lot of these funds to be stored, then a lot more coins will be supplied to its investors. This, in turn, may lessen the demand because demand goes up whenever the supply is down. You have to take note of the cap of the ICO to get an idea of the supply and demand figures.

8. ICO Code Quality

ico-coded-quality-crypto

This step is more applicable to those who have more knowledge of computer programming. In order to know whether a certain ICO is junk or not, a lot of tech specialists actually examine the code that powers it. If the code is messy (especially during its final stages), then it might not be a very safe investment. Remember that the code is the core of the token. If the core itself is a mess, then you can assume that the rest of the company is too.

Just to give you an idea, a cryptocurrency that has function codes of more than 50 lines is a red flag for most programmers. If you’re really interested in investing a great deal of money into a particular ICO, you may want to take the time and hire a developer to look over the code for you.

9. The Number of Commits

Each cryptocurrency is powered by an open source code, which means that the public can view the improvements or the progress of the token. There will be logs that are also known as “commit logs” in the coding. A commit is a word that developers use to promote a code to the Github coding sector.

The number of commits in the log can tell you the progress and improvements of your cryptocurrency. It’s great to invest in a coin that has a high number of commits because it shows that the coin is developing quickly.

10. The General Activity of Developers

Aside from viewing progress of the code, another way to check progress of an ICO is to look into the Insights page of a particular ICO’s website. By clicking on the Insights page, you’ll see a chart of the daily commits of the cryptocurrency. Moreover, you can view the specific activity that each developer has completed for the token on a daily basis. You can check whether the developers of the coin are actually doing their job and making progress.

Conclusion

With the rising popularity of cryptocurrency, more and more ICOs will pop up on a monthly basis. In fact, ICOs have become one of the main methods of raising money for the development of new cryptocurrencies. As time passes, it will become even easier for people to have access to ICOs due to their rising popularity. Of course, this also means that people will have a harder time knowing which ICOs are worthy of funding and which ones are scams.

The key here is to do your homework on any particular ICO before investing. The checklist outline for you above should help you avoid any careless investment mistakes. The coins that don’t have much public information aren’t recommended.

A few resources I always check before investing into an ICO is…

https://icorating.com/

https://icoranker.com/

https://icobench.com/

Here you can view a comprehensive list of top ICOs along with ratings, rankings, and comprehensive analysis that will help you form a better buying decision.

 

Don’t invest in a token unless you have full knowledge about the coin that you’re planning to invest in. If you take the time to do your due diligence, and have investigated every facet of the ICO, then regardless of what happens to it, you’ll know you did everything in your power to prevent losing your investment captial…..and that my friend is something to be proud of. 

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