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Alternative Market Briefing

New research looks at how many ICOs turn out to be scams

Friday, March 22, 2019

Bailey McCann, Opalesque New York:

Are Initial Coin Offerings (ICOs) a scam? New research from Daniel Liebau and Patrick Schueffel looks at a group of ICOs from 2016 to determine how many offerings were fraudulent and what investors can do to safeguard their capital. The work was presented at the International Scientific Conference organized by The British Blockchain Association in London. Daniel Liebau is affiliate faculty at Singapore Management University and founder of Lightbulb Capital, a corporate finance boutique focused on FinTech and Blockchain. Patrick Schueffel is an adjunct professor at the Institute of Finance of Fribourg's School of Management in Switzerland.

ICOs emerged as a popular fundraising tool when cryptocurrencies were pricing at all-time highs. ICOs work roughly the same way as shares do in an IPO. Project-based digital currency is created to fund a business and investors buy the coins as they would buy shares in an IPO. A key difference, however, is that ICOs are usually offered before a business has been established, whereas IPOs are typically for businesses that have been up and running for some time. The speculative nature of ICOs means that the potential to lose money is very high. In fact, regulators have issued several warnin......................

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