Initial Coin Offering (ICO)
Initial Coin Offering (ICO)
An Initial Coin Offering (ICO) is a fundraising mechanism in which new cryptocurrencies or tokens are sold to investors in exchange for established cryptocurrencies, such as Bitcoin or Ethereum, or Fiat Currency. It is similar to an initial public offering (IPO) in the Stock market but is typically less regulated.
Examples
- Ethereum (ETH): Launched in 2014, Ethereum’s ICO raised over $18 million, allowing it to develop its Blockchain and smart contract technology.
- EOS: Conducted a year-long ICO from 2017 to 2018, raising over $4 billion, which was used to develop the EOS.IO Blockchain platform.
Cases
- Scam ICOs: Some ICOs have been fraudulent, such as Bitconnect, which promised high Returns but collapsed, leading to significant losses for investors.
- Regulatory Action: The SEC (Securities and Exchange Commission) has taken action against various ICOs for failing to register as Securities offerings, which can result in fines and legal repercussions.