Bloomberg
So much for the backlash against initial coin offerings.
Sales of digital tokens by technology companies this year have already surpassed the record amount raised in all of 2017 even as government officials from China to the US clamp down on offerings and incidents of fraud continue.
Block.one, a Cayman Islands-based startup that’s behind the EOS token, is on track to raise about $4 billion in an almost year-long offering expected to close on June 1, which would make it the largest ever fundraiser of its kind.
Even before Block.one, initial coin offerings have raised more than $9 billion this year, compared with less than $4 billion in all of 2017, according to ICO data tracker
CoinSchedule. Messaging service Telegram raised $1.7 billion.
“The ICO market is still hot,†Alex Michaelis, co-founder of CoinSchedule, said in an email. “EOS and Telegram have been big successful ICOs this year, albeit not a classic ICO in the sense that Telegram was closed to private investors only, and EOS
has been trading in exchanges for a while, which influences the token price.â€
The ramp-up is happening even as regulators are tightening oversight of digital tokens. The US Justice Department recently opened a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies. China has already banned the sales. The US Securities and Exchange Commission is cracking down on scams and raising questions over whether tokens from ICOs fall under the agency’s scope of regulation.
ICOs are also facing scrutiny over their relatively lax disclosures of how the money they raise will be used, and which rights their token holders will have. Often holders don’t have many rights.
Internet security company Qihoo 360 recently said it discovered security vulnerabilities in Block.one’s EOSIO blockchain platform that allowed attackers to take over the network. Block.one has since said that most of these vulnerabilities have been fixed.
While the regulatory scrutiny has been especially fierce in the US, many ICOs — such as Block.one — go around that by simply preventing Americans from participating in the token sales, Michaelis said. What’s more, “the SEC so far has shown to be aggressive towards fraudulent projects, and EOS seems to be a big and legitimate endeavour,†he said.