The South Korean government will make a decision in November on whether it will allow initial coin offerings (ICOs) again in the country, a top-level official has said. Hong Nam-ki, head of the office for government policy coordination, told lawmakers during the National Assembly’s annual audit on government actions that regulators in the country have been reviewing the topic in recent months, as CoinDesk Korea reported on Thursday.
Hong added that the Financial Services Commission (FSC), South Korea’s market watchdog, has been conducting surveys on ICOs since September. “We are going to form the position of the government in November based on the results of the investigation at the end of October,” he went on to say.
“If we waste time, the blockchain industry could face huge difficulties. We need to look at very realistic and specific ways to nurture the blockchain industry, and I think permitting ICO is one of them.”
Hong was responding to the question on ICO permission raised by Jeon Haecheol, a lawmaker from the ruling Democratic Party, who voiced support for lifting the current ICO ban.
Crypto M&A is on a Tear as Deal-Makers See Opportunity in Bitcoin’s Price Slump
Deal-makers seem to be anything but deterred by bitcoin’s price pain this year — they’re actually using it as an excuse to go bargain hunting. Despite the ongoing bear market in the sector, merger and acquisition activity by cryptocurrency companies among themselves and by companies hunting for bitcoin’s underlying technology is hitting record levels.
Total blockchain and crypto-related deals have surged more than 200 percent at an annualized rate this year, according to data from PitchBook that was compiled by JMP Securities. Bitcoin, meanwhile, has lost 54 percent of its value.
As of Monday, 115 deals involving cryptocurrency or blockchain had been announced, on pace to hit 145 by the end of 2018. The count is up significantly from the 47 total deals completed last year, when bitcoin’s price was surging to almost $20,000.
While JMP didn’t have data on the average size of the deals, since many of the details are private, the firm said a majority of the M&A transactions are global in nature and “relatively small” at less than $100 million. The PitchBook data includes majority investments, partial liquidation and full acquisitions.
Most Tokens From ICOs Are Securities, Former CFTC Head Says
Gary Gensler, former chairman of the U.S. Commodity Futures Trading Commission, said that most cryptocurrencies sold through initial coin offerings should be considered securities.
A classification by the U.S. Securities and Exchange Commission would subject the coins and exchanges offering them to greater scrutiny.
One of the ways regulators determine whether an asset is a security is with the so-called Howey Test. For Gensler, coins such as Ether would have initially met the requirements of the test as there’s an investment of money in a common enterprise, and the expectation of profit which comes from the efforts of a third party. Ether has since become decentralized, he said.
HBUS Announces First Ever PAI Coin Listing And Giveaway To U.S. Audience
HBUS, one of the fastest growing U.S. digital currency exchanges, today announced the listing of PAI Coin on HBUS’ digital currency marketplace. The listing will coincide with a 125,000 PAI Coin giveaway to new registered HBUS users. PAI Coin is developed by Project PAI, an open-source project developing the world’s first blockchain-based platform for intelligent 3D AI avatars.
Earn up to 2,550 PAI Coins! @HBUSofficial is partnering with @ProjectPai to celebrate the listing of PAI on HBUS! Register for HBUS and trade PAI in order to receive rewards! https://t.co/JLhSoywgF8 pic.twitter.com/9ZIcIKevwp
— HBUS (Huobi's U.S. Partner) (@HBUSofficial) October 10, 2018
“HBUS is committed to introducing groundbreaking blockchain projects to the American audience with disruptive potential,” said Frank Fu, CEO of HBUS. “Project PAI has shown the vision and ability to execute on the evolution of artificial intelligence as it relates to each and every one of us.”
HBUS is the U.S. partner of Huobi, one of the world’s largest digital currency marketplaces, and offers a wide variety of tokens and giveaways to the American audience. The promotion will take place from October 10th to October 24th, with deposits open on HBUS’ digital currency marketplace on October 10th and trading beginning October 11th. Makers will enjoy 0 trading fees and takers will enjoy 0.03% trading fees for PAI trading pairs (PAI/USDT, PAI/ETH, PAI/BTC) for the duration of the promotion.
Twitter Promoted a Fake Elon Musk Crypto Giveaway Scam
A verified Twitter account masquerading as Elon Musk was used to publish and circulate a promoted tweet for a crypto giveaway scam Thursday morning.
The since-deleted tweet was posted through the account @TylerFlorence, which as of press time is still accessible. A link posted to the tweet directs to a giveaway site (which CoinDesk is not linking), prompting users to “sеnd frоm 0.2 to 5 BTC tо the address bеlow and gеt frоm 1 to 100 ВTC back!”
— Stuart🍸JSA⚠️ (@Stuart63JSA) October 11, 2018
The news triggered an outcry from users who saw the tweet, renewing scrutiny of the social media platform’s anti-scam practices.
The incident is notable given that it involved a verified account but also that the scam information was circulated by way of a promoted tweet. Promoted tweets are paid for and are generally used by advertisers to reach a wider audience than they normally would through their existing network of followers, taking advantage of search trends (in this case, the public interest around the controversial Tesla CEO) to boost performance and visibility.
New Zone to Opt for ICO Instead of an IPO in Singapore
The Multi-Billion dollar turnover company specializes in ferrous and non-ferrous metal trading in different forms. In the ferrous industry, New Zone holds a special spot among the top traders of Galvanized Steel and Hard Steel Sheet Coils. As for non-ferrous metals, Nickel Cathodes and Zinc Ingots are the primary products. New Zone has two subsidiaries, New Alloys Trading Pte Ltd. in Singapore and Mine Craft Limited in Hong Kong. The subsidiaries mentioned above execute holistic operational needs for New Zone.
We will not be limiting ourselves with Hard commodities; this digitalization will help us reach more people with Agricultural and Energy based commodities. There are no substantial usage of Cryptocurrency and Blockchain technology in the much-needed agricultural industry.
With a trading volume of about $2 Billion, and clients like Trafigura and Glencore Xstrata, New Zone team seems like a strong enough force to raise a massive $1.5 Billion, the proposed Hard cap in the ICO. Although, the team understands the different challenges associated with other crucial details like the integration of ETF’s, and the different aspects of white label offering, New Zone is ready to get the best solutions for every challenge. New Zone will be releasing New Zone Iron to New Zone Oil tokens, ensuring that the white label process is carried out with relative ease by companies of other countries.
A big step will be the incorporation of ETF’s using New Zone tokens for our retail investors. The whole process is a little tricky, but we are up for it- Leadership Team New Zone. One noteworthy feature that the company focuses on is the availability of the white label franchise, which the company says will be started once the project completes its second phase.
“We wish to bridge the gap between commodities and Cryptocurrencies, which is why we are bringing New Zone Tokens,” added the leadership team at New Zone. It goes without saying this is a crucial ICO to look out for; New Zone brings something unique to the whole ICO fad. The company also claims to be the world’s first crypto friendly commodity trading platform.
Secure Token Trading Platform Closes Gap Between Traditional and Crypto Finance Worlds
Extauri is Europe’s first secure and compliant trading platform for cryptocurrency tokens, fiat currency, and traditional banking products such as stocks, bonds, and ETFs. Extauri’s mission is to build awareness and acceptance of cryptocurrency as a safe and profitable class of investment. Extauri is closing the gap by offering an innovative financial platform to combine the advantages of blockchain technology with the secure products offered by the conventional banking system.
“The main issue in the existing market is that you have security tokens, but they can’t be traded on a public exchange. Token security is very important to the viability of future finance projects seeking alternatives to bank financing. This is possible with Extauri due to our secure model and licensing,” noted Domenik Gerapetritis, CBDO & Co-Founder
Presenting exclusive protection against fraud by users and operators of the exchange, Extauri is equipped with an electronic communications network (ECN) license, is approved by FMA and BaFin, and adheres to the standards of the Economic and Monetary Union of the European Union.
Security and compliance are integral to Extauri’s vision. The platform does not rely on third-party solutions, but on the firm’s own developers and infrastructure. This is part of how Extauri meets financial security standards. Whereas most exchanges rely on external frameworks, Extauri’s in-house development approach eliminates the potential for foreign and unknown source code or ‘backdoors,’ ensuring the integrity of the ledger.
“Security of cryptocurrency, and investment are our key principles. Existing platforms are largely outside banking regulations and lack transparency. We handle the legal and technical side of things, so you don’t have to,” reflected Tino Cabero, CEO & Co-Founder.
An innovative component of Extauri’s trading solution is the self-managed My Admin Wallet. Only the user knows the private key. Extauri has no access to the wallet, providing the user with complete anonymity. Only the transaction is processed by Extauri’s systems, protecting against misuse of data by third parties. Offering this protection at no additional cost, Extauri exemplifies its key values in security, privacy, and self-determination.
Led by a dedicated team of experts in crypto, management, securities, IT, and development, the firm is after ‘something extraordinary.’ Extauri brings together sought-after talent across roles including finance, operations, technology, security, and software with the experience needed to deliver a secure platform and address future challenges.
Extauri’s trading process allows investors to connect to the crypto world in an intuitive, fast, legal, and secure way. Capital raised from the token sale will support platform implementation, IT security, legal department expansion, customer success team development, expansion of operations, and development of community systems. The securities exchange platform is setting the stage for the widespread acceptance of the crypto market and the adoption of blockchain technology in our daily lives.
South Korea’s National Policy Committee Calls for Legalization of ICOs
The chairman of Korea’s National Policy Committee has called for the legalization of initial coin offerings (ICOs), providing that a regulatory framework is put in place.
According to a report from CoinDesk Korea on Tuesday, Min Byung-Doo, who is a member of the country’s governing Democratic party, said that, with token sales becoming a global trend, “I do not want the ICO door closed completely … The state should not ignore [the issue].”
The policy chief spoke earlier Tuesday during 8th plenary session of the National Assembly, at which lawmakers posed questions to the administration.
In order to create trust in the industry, ICOs should also be regulated, Min stressed. However, the official pointed to reluctance on the part of the government to draw up new rules as a prevailing issue.
Specifically, he said that “fraud, speculation and capital laundering must be strictly prohibited,” and the crypto industry would need to self-regulate and introduce safety standards as well.
The country’s financial watchdog, the Financial Services Commission, announced a ban on ICOs in September 2017, although the law has not yet been enacted, according to the report.
The lawmaker pointed to the economic advantages of token sales, saying that while there is a pessimistic view of cryptocurrencies in some quarters, many token projects are seen as having a viable future.
Investors in German ICOs Have Suffered Losses as High as 90%
Investors in German ICOs have lost up to 90 percent of their capital, Cointelegraph auf Deutsch reports Monday, October 1.
German business magazine WirtschaftsWoche compared the token issue prices of Initial Coin Offerings (ICO) carried out by German startups with the prices of early September 2018. The report found that, with up to 90 percent loss in value, the German startup coins lost even more value than lead coins like Bitcoin (BTC) and Ethereum (ETH), which have also fallen sharply following record highs at the end of 2017.
WirtschaftsWoche has found that, so far, only eight startups with a head office in Germany have completed an ICO. Many other German ICOs were carried out by legally independent companies abroad. The coin of financial group Naga, which is listed on the Frankfurt Stock Exchange (Frankfurter Börse) was bought by Naga Development Association Ltd. and issued in Belize.
Among the numerous German token publishers, only the financing platform Neufund and the shopping app Wysker managed to keep the value of their tokens stable. Five other projects, such as the Frankfurt financial start-ups Savedroid and Iconiq Lab, have lost between 40 and 92 percent in value, respectively.
Last summer, IT industry association Bitkom reported that German IT startups continue to prefer a classic Initial Public Offering (IPO) over an ICO for raising capital. In a survey of 302 IT and internet startups, 22 percent of respondents reported that they planned to go public, while only three percent said they wanted to raise funds with a token offering.
Bitmex: Ethereum Holdings in the ICO Treasury Accounts
Following on from our first piece on ICOs in September 2017, which focused on the team members and advisors, in this report we work with TokenAnalyst to track the Ethereum balances of the ICO projects over time. We look at the amount of Ethereum raised and the US$ value of the gains and losses caused by changes in the Ethereum price, for each project. We conclude that rather than suffering because of the recent fall in the value of Ethereum, at the macro level, the projects appear to have already sold almost as much Ethereum as they raised (in US$ terms). Of the Ethereum still held by the projects, even at the current c$230 price, projects are still sitting on unrealised gains, rather than losses.
Ethereum raised by 222 ICOs – Macro analysis
|ETH raised by EOS||7,211,776||3,824|
|ETH raised by other projects||7,972,003||1,639|
|Total ETH raised||15,183,779||5,463|
|ETH sold by EOS||(7,211,776)||(3,892)|
|ETH transferred out/sold by other projects||(4,113,345)||(1,560)|
|Total ETH transferred out/sold||(11,325,121)||(5,452)|
|ETH Balance remaining (Sept 2018)||3,858,659||830|
Overall profits & losses caused by changes in the price of Ethereum – US$ million
|EOS project gains||68|
|Gross realised ETH gains by other projects||692|
|Gross realised ETH losses by other projects||(34)|
|Net realised gains||727|
|EOS unrealised gains||n/a|
|Gross unrealised ETH gains||403|
|Gross unrealised ETH losses||(311)|
|Net unrealised gains||93|
|Total net gains||819|
- This analysis only considers the Ethereum balances of the ICO projects, which we have tracked on the Ethereum blockchain. Funds raised in currencies other than Ethereum are not considered nor is the balance of the new token created by the project. Our reported totals are therefore lower than some other sources. Therefore while our figures may be an underestimate, one at least has a degree of assurance that the balance is calculated independently of the project. At the same time we are missing several projects such as Tron, as we have not identified a treasury address or an address cluster.
- The estimate of the value of Ethereum raised is calculated by taking the highest value of Ethereum inside the address cluster of each project at any point in time (with the exception of EOS). This will result in some inaccuracies.
- The estimate of the value of US$ raised is calculated by using the average ETH price during the ICO period. This should therefore be considered as a rough and unreliable estimate.
- The estimate for the realised gains was calculated by taking the month end Ethereum balance for the address cluster of each project every month and then looking at the reduction in the Ethereum holdings. The average Ethereum price for each month was then used to estimate the US$ value of Ethereum that was sold. This is likely to be inaccurate and it is possible the project retains ownership of the Ethereum or that the Ethereum was not sold for US$.
- While we believe our estimates at the macro level may be reliable, at the individual project level our figures are likely to be unreliable. We apologise for any errors or inappropriate assumptions.
Commentary on the overall Ethereum holdings and sales
The Ethereum price has fallen almost 85% from the US$1,400 peak price in December 2017. As we mentioned back then, the value of Ethereum and the associated crypto-currencies was high and there was significant downside risk. The large fall in the value of Ethereum led some to question if there could be a “downward price spiral” due to the concentrated Ethereum holdings of the ICO projects. The theory being that many ICO projects were sitting on a large treasure trove of Ethereum and that as the price of Ethereum fell, these projects were going to “panic sell’, fearful of being the last project holding their Ethereum bags.
Our analysis, along with the team from TokenAnalyst, shows that on a macro level, the above theory may not be applicable. Of the 222 projects which we looked at, they raised US$5.5 billion worth of Ethereum and they may have already sold almost exactly the same amount (just US$11 million less). These ICOs currently hold 3.8 million Ethereum, around 25% of the Ethereum they originally raised. However, in US$ terms, these projects have essentially already sold the same amount of Ethereum which they originally raised, leaving them a nice holding of US$830m of Ethereum.
The figures are somewhat skewed by the EOS project, which remarkably raised around 70% of the Ethereum (by US$ value) of all the projects on our list, if our estimates are correct. However, even excluding EOS, the overall picture remains similar to what we described above, with projects selling almost the same in US$ terms as the amount they originally raised.
Despite the 85% reduction in the Ethereum price from its peak, the projects have realised gains of US$727 million due to profits from Ethereum have they already sold, often selling before the recent price crash. The 3.8m Ethereum still on the balance sheets of these projects may not have that much of an impact on the Ethereum price, as it represents a reasonably small proportion of the 102 million supply of Ethereum. At the same time, on a macro level, the projects may be feeling reasonably confident rather than needing to panic sell.
As for the unrealised profit and loss situation, the ICOs are sitting on net gains of US$93 million based on an Ethereum price of US$215. It may surprise some that ICOs are still in a net unrealised profit situation, but many of the Ethereum balances were built up before the price rally at the end of 2017, as the chart below indicates. Although some individual projects may be suffering significant losses. Gross unrealised losses, the sum of all the losses for the projects which have lost money by holding Ethereum, are US$311 million, which is more than offset by US$403 million in gross unrealised gains.
Total tracked Ethereum holdings of the 222 ICO projects (daily data) vs Ethereum price
As the above chart indicates, over the 26 month period, the peak Ethereum holdings of the ICO treasury accounts were only 5.1 million, significantly lower than the 15.2 million which was raised (8.0 million raised when excluding EOS). This may indicate that Ethereum proceeds from earlier ICOs were reinvested in new projects, either directly or more likely indirectly, after being sold on the market.
Breakdown of Ethereum holdings data by ICO project
Top 20 ICO projects ranked by total gains from change in value of Ethereum holdings – US$ million
Top 20 ICO projects ranked by total loss from change in value of Ethereum holdings – US$ million
Projects ranked by reported US$ raised
|ICO||ETH Raised based on BitMEX Research analysis||US$ million value of ETH raised based on BitMEX Research analysis||Token Data reported total raise (US$ million)|
|Basic Attention Token||57,645||13.2||36.0|
|Crystal Clear Services||3,542||1.1||3.4|
(Note: The totals are slightly smaller than the opening table in this report as some smaller projects have been excluded)
The peculiarities of EOS
As we alluded to above, since EOS sold its Ethereum regularly during the ICO period, we needed to use a different methodology to analyse EOS’s Ethereum holdings. We identified 171 EOS “internal transactions” which transferred Ethereum outside of the EOS address cluster. The total value of these transfers was 7.2 million ETH or US$3.9 billion based on the closing price of Ethereum on the day of each of these transfers. Using these figures and the average Ethereum price during the ICO, we believe EOS raised US$3.8 billion worth of Ethereum, reasonably close to the reported US$4.2 billion figure, which presumably includes money raised in currencies other than Ethereum.
Unlike other projects we therefore do not have the same degree of confidence that the 7.2 million Ethereum balance was not double counted (i.e. The EOS project receiving investments in the form of Ethereum and then recycling those same Ethereum coins back into the ICO to inflate the amount raised). However, we have no particular reason to believe this recycling occurred and the 7.2 million Ethereum which was transferred out of the smart contract can give a degree of assurance the raising was genuine. We are merely pointing out that the level of assurance is lower than for other projects in our analysis, based on our methodology.
We conclude that the ICO treasury accounts have a much lower level of exposure to the price of Ethereum than many may have thought. The ICO projects or project teams essentially made out like bandits, at least with respect to the Ethereum they raised. As a tool to raise funds, the ICOs have clearly been a phenomenal success, to such an extent that even a further significant fall in the value of Ethereum will barely make a dent into the success.
Quite what this means for the Ethereum price going forwards is unclear, however we believe we have shown the “panic sell” thesis is either false or will only occur to a lesser extent than some expect.
Whether these projects invest the money well and develop useful products and services is of course another question. In our view the level of accountability in some of these ICOs is low, for instance even obtaining information about the amount raised, which currencies the raise occurred in, which Ethereum addresses are used and if the funds are spent/sold or not, can be challenging. Therefore fruits of these investments may disappoint in our view. Actually many of these projects are competing over the same scarce resources, developers. One could argue that the volume of capital obtained by these ICOs could inflate the cost of these resources (perhaps the less experienced developers). This may not only plague the crypto-currency ecosystem with higher costs, but also to some extent some startups in the wider technology industry, for many years. Whether our cynical view is right or not, only time will tell.
15 Congress Members Ask SEC to Clarify Cryptocurrency and ICO Guidelines
More than a dozen members of Congress have signed a letter asking Securities and Exchange Commission (SEC) Chairman Jay Clayton to clarify the guidelines the agency uses to determine whether cryptocurrency assets are securities under federal law.
The letter, which according co-signer Rep. Ted Budd (R-NC) has already been signed by 15 lawmakers across the political spectrum, tells Chairman Clayton that members of Congress are concerned that the SEC’s failure to issue definitive guidance on what precisely makes an ICO token a security is causing startups to abandon the U.S. in favor of jurisdictions where the rules are more clear.
“Current uncertainty surrounding the treatment of offers and sales of digital tokens is hindering innovation in the United States and will ultimately drive business elsewhere.”
Later in the letter, which Rep. Budd said is the “byproduct of months of work and conversations” with industry trade groups and other lawmakers from both the Republican and Democratic parties, the legislators question the SEC’s decision to use enforcement actions in lieu of formal guidance to clarify policy on cryptoassets.
“We believe that the SEC could do more to clarify its position. Additionally, we are concerned about the use of enforcement actions alone to clarify policy and believe that formal guidance may be an appropriate approach to clearing up legal uncertainties which are causing the environment for the development of innovative technologies in the United States to be unnecessarily fraught.”
The lawmakers further asked Clayton to answer three specific questions regarding the legal status of ICO tokens and other cryptocurrency assets, including whether he agreed with a statement by William Hinman, director of the SEC’s division of corporation finance, which indicated that a token that was originally sold as an investment contract — i.e., a security — could later shed that label. Hinman had specifically stated that he did not believe ether should be regulated as a security, despite the fact that it was originally funded through a token presale.
The publication of this letter comes just days after Rep. Warren Davidson (R-OH) — one of the letter’s co-signers — hosted an ICO summit on Capitol Hill in which representatives from the cryptocurrency and mainstream financial industries asked Congress to provide a clear regulatory framework for blockchain innovation.
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