ICOs issued $24.2 Billion In Tokens To Themselves In 2018, Where Did It All Go?

TL;DR

  • About $5billion remain out of the $24.2 billion raised due to loss of coin value.
  • Billions of dollars worth of coins remain in ICO founding teams wallets
  • The data highlight the need for lockup clauses or vesting schedules to ensure founders are motivated to complete projects post funding

BitMEX recently published a report in partnership with Token Analyst detailing the whereabouts of the $24.2 billion in ICO tokens issued (currently worth about $5 billion after the market crashed).

The report details a lot of interesting points about the money raised from this crazy fundraising period:

  • About $5 billion remain out of the $24.2 billion raised due to loss of coin value. However, that is still $5 billion worth of tokens that ICO teams currently own, of which many would say was raised out of thin air, or based on lofty expectations to revolutionize industries with concepts that were not yet fully fleshed out and could never be realized.
  • Of this $5 billion, about $1.5 billion in gains were realized from selling these tokens while the market was still healthy.
  • USD values of these tokens are subject to scrutiny because liquidity was and continues to be an issue for large ICO token holders. It’s more likely that a significant portion of the $24 billion raised was either kept in ETH or transferred to Bitcoin, where it may have stayed long past the time in which the market was healthy (some funds may have been transferred to stable coins like Tether).
  • Veritaseum and Noahcoin, two cryptocurrencies that don’t seem to be gaining much attention these days, each issued over $4.5 billion in tokens to team-controlled Of the ~$4.8 billion issued by Veritaseum, the team experienced a ~$3.1 billion loss in value.
  • In fact, the top 10 proportional losses in the value of coins in team-controlled address clusters was an average of ~95%, with SALT losing ~97% of its value.
  • Huobi Token seems to have been the wisest of all ICO projects, transferring out over $350 million (more than half) of the ICO funds it raised out of team-controlled wallet clusters.
  • Today, Veritaseum still has the most significant current value of coins in team-controlled address clusters, at slightly over $1.5 billion.
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Source: Bitmex Blog

 

An Opportunity For The ICO Issuers To Get Rich From Air

Ultimately, the report points out what many had already suspected about the ICO market, which is true for the majority of founders. It provided an opportunity to enrich themselves by dropping their brand-new tokens to the market in exchange for ETH, driving the price of their self-issued tokens up, as giving them access to more ETH that could be held or cashed out for BTC or USD.

The report also highlights the complete lack of lockup clauses or vesting schedules, which are restrictions placed on founders in traditional markets to ensure that their goals are aligned with those of their investors.

Another goal of the lockups is that they cannot be rewarded with wealth before doing the hard work it takes to develop a revolutionary new technology solution that positively impacts the market.

Instead, the data shows us that in a free fundraising market, what we get are hundreds of issued tokens with no real value assigned, no concrete plans to achieve real value and minimal prospects of actualized gains.

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