The financial regulator issued a stern warning against speculative insanity about the initial offers of coins (ICOs) in crypto-conversion, such as bitcoyne promoted by celebrities, including Paris Hilton.
The authorities of financial behavior said that someone who invests in the ICO should be ready to lose all of their money, and some of these schemes were subjected to potential direct fraud.
ICO uses the language of conventional primary public offerings (IPOs) and is designed to raise money for Internet start-ups. But their similarity with the IPO ends.
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Instead of raising funds from the public in pounds sterling, euro or dollars, investors in ICOs pay for cryptoconversions, such as bitcoyne and ether. In turn, they are issued with a “coin” or “token,” which in fact is their share in the firm.
ICO has become quite popular with celebrities, including Hilton and Floyd Mayweather, to jump aboard. Last week, the heir of the hotel, tweeting 16 million followers, invested in what is called LydianCoin, whose goal was to raise $ 100 million.
In recent months it is believed that the ICO may have poured 1 billion pounds, and China is the center of speculative activity. But after the dispersal of regulators around the world, Bitokoyn’s prices fell, and the price fell from $ 4,950 in early September to below $ 4300, although this year it has grown significantly.
“ICO is a very high-risk, speculative investment,” said FCA. “You need to be aware of the risks involved … and are ready to lose the entire package.”
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In a long list of warnings, the regulator said that ICOs are almost completely unregulated, offer no protection to investors, are prone to extreme price volatility and have the potential for fraud. He added that the ISO brochures, often called white documents, “may be unbalanced, incomplete or misleading”.
Warning FCA follows similar regulatory actions around the world. Last week, the People’s Bank of China banned the collection of funds ICO and the launch of digital currencies, saying that this practice is illegal collection of funds.
According to Xinhua News Agency, the ICO trade in Beijing and Shanghai was the most torn, while during the year 65 ICO were launched, which attracted about $ 300 million from 105,000 investors.
Investors in ICO earn money when the value of their coins grows, and after huge gains in bitcoin – since January last year, despite recent falls, with a growth of six times, and another crypto currency, called ethereum (which amounted to 12 to 308 US dollars ), many investors were ready for reflection.
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Ethereum itself was launched with the sale, resulting in revenue of 31,591 bitokoyn (then about 18.5 million dollars) in exchange for his first 60-meter tokens.
It was followed by at least 10 other ICOs operating on the air, including the main token used for contactless advertising in the Brave adblocking browser ($ 35 million), Token MobileGo, used in the video game market based on the crypt currency ($ 26 USA) m) and the Bancor network token, which supports a platform designed to facilitate users creating and launching their own tokens ($ 152.3 million).
The most notorious failure was the launch of the “Decentralized Autonomous Organization – DAO”, which was sold as a crowdsourced hedge fund. He lost about $ 150 million in money investors after the discovery of a vulnerability in the code, which allowed to neutralize the funds of an anonymous attacker.