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Alternative Market Briefing

Other Voices: ICO hell is here (for U.S. investors)

Friday, July 28, 2017

Chris Kitze Technology Innovator and Investor

ICO's surpassed VC funding for blockchain companies in the first half of 2017. Tezos raised $232m in two weeks and Bancor pocketed $153m in just three hours. New coin listings on exchanges have generated eye-popping returns for early investors. Everyone wants in on the next 10x return in two months and there's a full blown case of ICO fever. However, the U.S. Securities and Exchange Commission (SEC) just threw some poison in the ICO punchbowl for U.S. investors, in a recent opinion letter regarding the offers, sales and trading in DAO tokens. I'm not a lawyer, but I have spent a lot of time in law offices to know when to call a lawyer to get advice. This is the time for anyone thinking about issuing or selling cryptocoins to get some good legal advice in light of this huge change in policy by the SEC.

The DAO token, which was created as a decentralized and software automated investment vehicle for venture investing, raised a whopping $168 million in 2016. DAO was based on ethereum, people contributed ethereum to the project and computers were supposed to automatically handle voting by the contributors, who voted for the projects they wanted to support. There were problems; the "smart" contract was poorly written (line 666!) and a clever individual was able to siphon off about $50 million worth of coins. Of course the venture investing community can't stand for this, it would put them out of business jus......................

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