BitMEX Research Reveals ICO Teams Have Banked Almost $13B With Very Little to Show
A new in-depth study was recently published at the BitMEX blog. In this study, made by BitMEX Research, the research arm of the company, BitMEX shows that around $24 billion USD have been gathered by Initial Coin Offerings (ICOs) and it affirms that, without being very accountable or transparent about the process, these companies banked in a lot of money.
The study is focused on showing how these companies allocated their funds and what they ended up doing with them.
What is actually more incredible about the whole thing is how these ICOs were able to make a profit of $13 billion USD completely out of thin air. Most ICOs were not even about projects, only promises of projects and everybody invested heavily in them because of the hype. According to the study, $24 billion USD have been gathered so far and more than half of this was pure profit.
It was easy money, that’s for sure. The BitMEX article confirms this view as it describes the ICOs (both the scam and legal ones) as something that was made without a lot of accountability or transparency and that made many companies rich overnight.
An important highlight was how the age of ICOs was pure Wild West. It was a wasteland without any rules, you see, companies (at least before the regulatory agencies went after them) could take all the money out of their customers with a good marketing campaign and not even deliver something real.
This is, in fact, something that sparked all the issues with the U. S. Securities and Exchange Commission (SEC) calling these tokens securities. A security token is, well, secure. The company has an obligation to provide something and most of the ICOs did not, and this study shows.
Tracking US$24 billion Of Tokens ICO Teams Gave Themselves
In collaboration with @thetokenanalyst, this report focuses on the treasury balances of the ICO tokens. Teams issued themselves US$24.2 billion of their own tokens, now worth around US$5 billionhttps://t.co/M7vSJjJwv5 pic.twitter.com/mHoDaYFvrX
— BitMEX Research (@BitMEXResearch) January 16, 2019
Teams burned, minted and sold their own tokens at will without any kind of oversee or regulation. The research makes absolutely clear how they profited: they created tokens for their products without even having the products and sold them, often using Ethereum.
The research indicates that the teams are still sitting on top of at least $5 billion USD in their own tokens despite the price losses.
It is very important to notice, however, that all the research was done by reviewing the data out of the blockchain and smart contracts and is “likely to be inaccurate at individual project level” because machine learning and estimates were used instead of real hard data.
This is no reason to take these affirmations with a grain of salt, though, as their overview of the whole market is pretty spot on. ICOs were something that sparked a hype train and delivered very little in many cases. Even the companies that did deliver had their tokens diminished in prices a lot.
The report ends by affirming that ICOs are starting to have a tougher time now as they need to get funds and people are less likely to believe them. The conclusion is that while the entrepreneurs might remember how easy it was to raise money, investors will remember how much money they lost and we will not see the rise of ICOs again so soon.