The ICO enthusiasm of the past year has waned. Promised profits ten times of their original value are giving way to threats from disgruntled ICO investors.
Good times for ICOs are over
One reason for the success of many Initial Coin Offerings (ICOs) was that anyone could participate. This is one of the big differences to a conventional initial offering where only accredited investors are allowed to participate. However, the low admission requirements had their price. Many of the new investors had problems distinguishing between a legitimate and a dubious project. Now the investors who bet their money on the wrong horse are hoping to get help from the Securities and Exchange Commissions or their lawyers.
But this is not how it works in the world of crypto currencies. Of course, criminal offences are also punished in ICO projects. With most of the failed projects, however, it was not because the developers maliciously wanted to cheat their customers. Much more often the teams behind the projects had miscalculated completely and the project could not be implemented because of this. In such cases, the odds in court are significantly lower. Often, ICO investors have not properly dealt with the terms and conditions beforehand. Now they are looking in these very lines for possibilities to get some of their money back.
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Transnational nature of the ICOs makes it difficult for investors
Digital coin lawsuits have tripled this year in the United States. A dozen class-action lawsuits have also been filed against Paragon Coin, Cloud With Me, Tezos and Latium Network, among others. Some of the plaintiffs are hoping for the assistance of the US Securities and Exchange Commission. Nevertheless, Stephanie Avakian, co-director of the agency’s enforcement committee, recently stated that ICO cases that do not involve fraud are unlikely to experience the full force of the law.
Many of the project managers of failed ICOs are bombarded with news from angry investors. They are constantly threatened with legal action in the hope of receiving some of the tokens. While some of the investors probably have the means to put their threats into practice, these procedures are complex. Due to the international nature of many ICOs, it is often unclear which national laws should be used where.
