Well, this is interesting.
An interesting thread popped up on r/cryptocurrency today that was posted by u/AsleepInstruction8. The thread was titled, “I worked at an ICO crypto company. It’s crazy how people still believe/invest in them”.
The user goes on to explain his experience as an employee at an ICO crypto company.
In the thread, the user
“Since there is no insider trading regulation, my coworkers frequently purchased tokens when they’re about to release good news and dumped before they released bad news”.
Unfortunately, without hard evidence and
“My ICO company didn’t sell their ICO funds and lost 90% of their $20m+ raised and had to lay off most of the team. They still haven’t announced to their investors that most of the team was laid off”.
When you lose 90% of your crypto holdings by not properly hedging funds for development, it begs to question just how much exactly is really needed for development. Furthermore, it also begs to question the competence of the team behind the project holding a majority of their raise in highly volatile crypto assets.
“My ICO company founder used the funds to do all kinds of stupid shit including wasting money on unnecessary parties, paying for a spouse’s expenses”.
This is completely unacceptable but, an unfortunate truth that sets bad precedents for projects who are still building and delivering on their vision.
“My ICO company founder never built software in her life – just had a nice resume from non-software companies before. And then what do you know? She didn’t magically know how to manage a software company after she got the ICO money”.
“My ICO company listed 20 advisors during the ICO, they didn’t advise shit and didn’t help us at all at developing the product. They were just paid to have their names on the whitepaper”.
I am really curious as to what the name of this project is. By not delivering on their product and promising investor returns, they can be held accountable under security laws in the US. Furthermore, if they did not KYC/AML, their ICO is already an unregistered security offering if they are based in the US.
“No one in the company believed in the vision from the whitepaper. They just oversold in the whitepaper to raise money”.
“My ICO company spent a ton of resources on secret products that only benefited the founder of the company – not the token holders/investors. For example, the founder made the engineers build some random ass eCommerce product that had nothing to do with the vision of the white paper and would never utilize the token. If that eCommerce product succeeds, she gets to keep all the profit”.
Uh oh, looks like funds dedicated for development were abused. I can only imagine the public’s reaction if this project’s name was provided.
With regards to token utility, the SEC has made its stance on utility tokens very clear. Just by calling a token a “utility token”, it does not exempt it from security status.
SEC Chairman Jay Clayton has given a public statement on what exactly to look out for in regards to ICO’s.
A lot of things can be drawn from this story. It shows not only how one ICO was terribly inexperienced and crafted a well fabricated lie to raise millions from the public, but also provides insight into how other projects may have done the same.
Throughout 2017 to early 2018, investors were metaphorically drunk. Taking time to reflect on it now, we can see that. While the bad apples have caused damage and tainted this space’s image, there remain legitimate projects that are building real value and not buying into the hype show.
Projects that can survive the crypto winter will be able to sustain themselves long term.