Chinese Public Now Has a Way to Report Illegal ICO

The China National Internet Finance Association has added a "token sales" category to its platform that allows the public to report on illegal financial activities
28 August 2018   823

The Chinese self-regulatory organization intends to support the state in combating illegal campaigns for the ICOs. This is reported by CoinDesk.

The Chinese National Internet Finance Association (NIFA), a self-regulatory organization founded by the People's Bank of China (PBoC), added the category of "token sales" to its platform designed to convey reports of possible episodes of illegal financial activity.

NIFA is the portal operator, through which citizens can file complaints about suspicious financial activity. Previously, most of the complaints sent through this portal were related to lending between individuals, insurance on the Internet, equity financing and online payments.

Now the association has added the option of sending messages about "sales of tokens", through which residents of China will be able to report on activities related to cryptocurrencies, recognized illegal under the last year's order of PBoC.

The activities that is offered to be informed by portal users includes the functioning of crypto exchanges, direct and indirect provision of registration, trading, clearing and settlement services during the ICO, as well as business insurance in the field of cryptocurrencies.

Last week, China's leading financial regulators issued a warning about new forms of attracting financing using cryptotokens such as "initial exchange offerings" and "initial fork offerings" despite the country's bans.

In addition, the Chinese corporations Baidu, Alibaba and Tencent expressed their readiness to cooperate with the government and promised to prevent any attempts to carry out OTC transactions with cryptocurrencies in their own services.

ICOs May Allocate $24B Tokens to Themself

As reported, price of tokens, "left to cover the operating costs", reached $80B at the peak
17 January 2019   145

The total cost of the tokens that the organizers of well-known ICO projects have left to cover the operating costs and remuneration of developers at the time of release was $ 24.2 billion. At the peak, their price reached almost $ 80 billion. This is evidenced by the results of a study conducted by BitMEX together with the TokenAnalyst.

At the current illiquid rate, the assets of ICO-projects in their own tokens amount to about $ 5 billion, having depreciated by more than $ 70 billion.

However, the researchers note, this value is rather arbitrary, since the liquidity of tokens at peak levels was low. It is also incorrect to classify changes of this amount as losses because the organizers of the ICO transferred tokens into their wallets in accordance with the crowdsale conditions.

Having studied the archive of token transfers from ICO-team wallets, BitMEX and TokenAnalyst came to the conclusion that the realized profit from the sale of such tokens could be $ 1.5 billion, with the proviso that some of the tokens might not have been sold or left the wallets for other reasons .

The largest amounts of tokens in their wallets were credited by the Veritaseum and Noah project teams, which, as analysts say, looks “almost comical” against the background of real trading volumes.

Token data up to Dec 2018, data based on prices at the time(s) of issuance
Token data up to Dec 2018, data based on prices at the time(s) of issuance

This analysis highlights the lack of standards and transparency in the ICO market, especially when it comes to the allocation of tokens to the founding team’s wallet. Teams were often able to mint, burn, buy, and sell (their own) tokens at will, without analysts being able to easily track what is occurring. We would often see tokens in exchange clusters, and it was hard to tell whether the token project “paid” the exchange to list tokens or the token project just transferred their treasury to the exchange to cash out.
 

BitMEX Researchers' Report

In November 2018, BitMEX CEO Arthur Hayes said that the tokens of the largest ICO projects would collapse after entering the secondary market.