Crypto billionaires-in-waiting, it’s time to brace yourselves. A new research paper has found that of all the large ICOs that have tried to raise funds recently, a solid 81% were frauds, 6% were failed, 5% had gone dead, and 8% actually made it to market. Yes, I’m equally surprised that 8% of ICOs were legitimate.
The study was conducted by the Satis Group, a firm that bills itself as a “premier ICO advisory firm” with a “longstanding presence within the cryptocurrency community and arguably one of the best social media marketing, deal structuring, and management efforts in the business.” In other words, it’s not the kind of group that has much to gain by trashing the reputation of ICOs.
For the study, the authors only looked at ICOs with a market cap greater than $50 million, which gets rid of the low-effort social media scams at the like. From there, the study broke the ICOs down into one of six categories, using publicly accessible data:
· Scam (pre-trading): Any project that expressed availability of ICO investment (through a website publishing, ANN thread, or social media posting with a contribution address), did not have/had no intention of fulfilling project development duties with the funds, and/or was deemed by the community (message boards, website or other online information) to be a scam.
· Failed (pre-trading): Succeeded to raise funding but did not complete the entire process and was abandoned, and/or refunded investors as a result of insufficient funding (missed soft cap).
· Gone Dead (pre-trading): Succeeded to raise funding and completed the process, however was not listed on exchanges for trading and has not had a code contribution in Github on a rolling three-month basis from that point in time.
· Dwindling (trading): Succeeded to raise funding and completed the process, and was listed on an exchange, however had one or less of the following success criteria: deployment (in test/beta, at minimum) of a chain/distributed ledger (in the case of a base-layer protocol) or product/platform (in the case of an app/utility token), had a transparent project roadmap posted on their website, and had Github code contribution activity in a surrounding three-month period (“Success Criteria”).
· Promising (trading): Two of the above Success Criteria.
· Successful (trading): All of the above Success Criteria.
81% of all ICOs studied fell into that first category, 6% failed, 5% went dead, and just 8% make it to trading. Of that 8%, not quite half were rated as successful, with the others either “promising” or “dwindling.”