Report: The ICO is dead, long live the ICO!

Rediscovering the ICO and the untapped opportunities

In the new world of cryptocurrency the buzzwords are Bitcoin, Ethereum, Altcoins, DeFi and Moonshots. Probably in that order. But it wasn’t always that way. Back in 2017/18 one of the most popular terms to roll off a crypto enthusiast’s tongue was ‘ICO’ (meaning Initial Coin Offering). In those two years alone over $20Bn was raised by cryptocurrency projects through this new funding mechanism. But all good and bad things come to an end, and so it was with the ICO. 2019 saw the number of ICOs drop off a cliff with crypto projects raising a paltry $400m. 2020 wasn’t much better. Crypto investors, it seems, have turned their attention to the latest shiny thing on their monitor — DeFi and moonshots. But the ICO lives on.

This article explores the brief history of the ICO. We review four ICOs which are currently raising money and finally we look at whether the ICO represents a fertile ground for lucrative investment opportunities.

What is an ICO?

A process or event in which a company (especially a startup) attempts to raise capital by selling a new cryptocurrency, which investors may purchase in the hope that the value of the cryptocurrency will increase. (Source: OxfordLanguages).

The ICO is an adaption of the IPO (Initial Public Offering) which is the method by which corporations raise money and list on a public exchange.

A Brief History

The first ICO was launched in 2013 by a techie named Willett. Mr Willett wanted to raise money for his latest venture and came up with the novel idea of raising money through the issue of tokens. This proved so popular that his project raised some $600k. The ICO quickly captured the imagination of the wanna-be blockchain entrepreneur and in 2015 it became the accepted way to fund crypto projects. Over $30Bn has been raised through ICOs since their launch. However the ICO band wagon came to a grinding halt towards the end of 2008.

Death by a Thousand Cuts

There were multiple reasons for the demise of the ICO. Although there were many successful ICOs that went on to do great things, Ethereum being the best example, the vast majority were either hair brained ideas reminiscent of the boom and bust or frauds reminiscent of penny stock scams. Because the participants in this phenomenon were mainly retail investors they eventually tired of losing money and took a step back from the chaos. That combined with the bursting of the cryptocurrency bubble in 2018 where bitcoin dropped from a record $19,511 to $4,500 was also a major factor for the ICOs demise. During the crypto winter that followed anything crypto related was wiped out including the inventive ICO.

A few other contributory factors for the ICOs downfall included the Chinese government’s ban on ICOs and the fact that Google, Facebook and Twitter banned all ICO advertising. That ban is still in place.

However whilst the rest of the cryptocurrency community rebounded the ICO could only achieve a fraction of its previous fund raising highs. So why didn’t the ICO make the same comeback as Bitcoin? Two words can explain that… Regulation and Enforcement.

Whilst everyone who had been or continued to be involved in blockchain were nursing their crypto hangover the SEC started to shoot fish in the cryptocurrency barrel. Telegram, Kik, BitClave,, ICOBox, even Floyd Mayweather took a solid hook to the jaw. The SEC were on the warpath. Their enforcement action against numerous projects who had raised funds via ICO made it crystal clear that many of these ICOs were in fact securities. You would have to be a maniac to launch an ICO in this climate. And there were a few maniacs who did exactly that.

Micro Cap Watch List

Every Friday CryptoQuestion provides a list of micro cap cryptocurrencies that deserve closer attention. We also highlight promising ICOs. View our latest list here.

Reinventing the ICO

There are two big problems with the traditional ICO. Firstly, because the funds raised are being used to build a project that in effect makes the tokens being issued a security. Secondly many of the ICOs are being marketed to investors in the same way as stocks are in an IPO. These two factors are inherent in the majority of ICOs and explains why the SEC was coming down hard on the ICO as a fundraising concept.

However despite giving you the false impression that the ICO is dead and buried it in fact lives on. As with most things in life and tech the crypto community pivoted. Yes there were the brave maniacs who ignored the shadow of the SEC and continued raising money for their projects using Willett’s ICO, Stellar and XRP is one prime high profile example. But the more sensible operators took a different approach.

The crypto funding community found four solutions to overcome the fact that the traditional ICO was in fact a security in a bad disguise.

  1. Many ICOs restricted certain countries from investing. US citizens and other high risk countries such as China and Singapore were prohibited from investing for example.
  2. Some token sales were made after the project had been built focusing on the utility of the token as opposed to its investment potential. That does require the project team to find alternative sources of capital to fund the initial build, but that isn’t usually a problem if the project is credible.
  3. A bright lawyer no doubt came up with the idea of something called a security token offer (STO — see below for an example of one of these). This is the concept of taking the ICO and turning it into an IPO by registering the token sale with the SEC. These STOs are not very popular as they proved prohibitively expensive. The exact opposite to an ICO.
  4. Finally some token sales were targeted at accredited investors or wealthy individuals. That way they avoided the long arm of the financial regulator. This method of fundraising, like the STO, proved unpopular. The average sophisticated investor didn’t seem too keen on investing in something he or she didn’t understand.

Targeting non US Citizens

Restricting US investors from participating in ICOs seems to be the most popular method for raising money now. If you can’t beat them avoid them is the policy.

It is clear from reading the majority of white papers that crypto projects are continuing to market what is in effect a security to fund the development of a new project whilst offering the prospect of earning a return on investment. In order to avoid US regulation ICOs have been structured so that the project is based in a ‘friendly’ jurisdiction, such as Switzerland, Estonia, Seychelles or Malta for example, as well as restricting US and other high risk countries’ citizens from investing. These projects are then free to build their platform without any regulatory concerns and later launch their platform to the world.

Utility and Governance Tokens

Issuing tokens that have a utility or function is another way to avoid regulation. For example the SEC has clearly stated that Ethereum’s ETH is not a security. That is because it can only be used on the Ethereum platform to ‘fuel’ the platform and pay for transaction fees. It is also not being marketed as an investment.

The issue of governance tokens in the DeFi space is something that has been popular for a while now. These tokens allow the owner to participate in the decision making of the platform. However unlike the traditional ICO these are only issued to participants on a given platform thereby excluding the average Joe. COMP tokens are a good example, where tokens are issued to people who utilize Compounds lending and borrowing platforms. There is some uncertainty however over the regulatory status of governance token, many argue that they are in fact a security because they have similar qualities to shares.

State of the ICO market Now

The biggest development in the ICO market was a few of the large exchanges entering the ICO space. Token sales made through an exchange became known as an ‘IEO’ or Initial Exchange Offering. The idea was that exchanges would vet the project and ensure it ticked all their boxes before offering it to their own clients. This was a good way to improve the quality of the offerings as it is unlikely or at least unwise to offload worthless tokens onto their loyal customer base.

The most notable participant in the IEO market is Binance with its Launchpad platform. It recently raised $56m for a project which attracted over 47,000 investors. At the time of writing there are at least 40 live ICOs.

There are countless websites where you can find the latest ICOs and IEOs. However many websites are out of date or display endless lists of projects many of which are no longer active. Here are a few worth looking at:

# of Live ICOs

ICO Drops — 2

ICO Hot List — 17

CryptoTotem — 4

CryptoCompare — 16


Micro Cap Watch List

Every Friday CryptoQuestion provides a list of micro cap cryptocurrencies that deserve closer attention. We also highlight promising ICOs. View our latest list here.

Review of Four Live ICO/IEOs


Offer Price: 1 INX = 0.9 USD

Target: $117m

Type: Security Token

Status: Open

Restrictions: None


INX is looking to combine all the promise and potential of blockchain in a regulated form. INX is aiming to launch a decentralized regulated exchange to trade cryptocurrencies on behalf of both retail and institutional investors. The exchange will go live within 6 months of the sale ending. $7m has already been invested into the technology. The offer is being made through the issue of security token via a fully registered SEC prospectus. Investors are entitled to 40% of the company’s cumulative adjusted cash flow. 60% of the proceeds from the offer will be held in a cash fund available to investors in case of liquidation, whilst 40% is being used to fund the overheads of the project.

White Paper

Investors have to confirm their ID and register before being able to view the prospectus.


The team is highly accomplished with team members having worked at American Express, Morgan Stanley, eToro and Ameritrade.

Our Opinion

Risk Rating: 7/10

Quality Rating: 6/10

Security: Yes

Billed as the ‘…first ever SEC Registered Token IPO’, the project definitely stands out in terms of quality. Not only has the management team spent a fortune on producing their prospectus, which forms the basis of the token sale, it has also had to jump through numerous regulatory hoops to get to where they are today. Those kinds of achievements only happen with a top notch management team.

So is this a project worth investing in? It will certainly be the first regulated decentralized exchange when the platform goes live, a market currently dominated by Uniswap. The regulation will provide new users with huge confidence in an otherwise unregulated environment. But there are some major downsides. Our biggest concern is the blatant greed of the management team. Investors are being asked to contribute 95% of the money but are only receiving 40% of the dividends (‘after adjustments’ — always a worry). And of the $117m being raised 40% is being used to pay management salaries and expenses, legal fees and other overheads. $47m is a lot of money going out the door for a startup. We believe this could be an interesting opportunity but the fact it is being advertised all over the internet makes us a little suspicious. With such an experienced management team they should be able to find more savory ways of raising money.

Mindsync (MAI)

Offer Price: 1 MAI = 0.20 USD

Target: $10.5m

Type: ICO

Status: Open

Restrictions: Cuba, Iran, Lebanon, Russia, Ukraine, Estonia, Syria, Libya, Sudan, Somalia and North Korea.


Mindsync is a platform and a global community of machine learning developers, data scientists and applied AI experts. This community will be able to cooperate as well as participate in competitions between individuals and teams to solve various problems.

MindSync is an AIaaS (AI-as-a-Service) and ExaaS (Expert-as-aService) platform. They seek to help solve business problems of customers through AI-based solutions that are created through rewarding competitions within the community or through choosing from a wide range of production-ready solutions in their repository. They are on a mission to provide better and cheaper AI solutions for a wide range of businesses through a readily available community of experts. While customers will be spoilt for choice at the available talent on the platform, the community members also get a platform to earn rewards, exchange experience and interact with like-minded individuals for personal and professional growth.

Click to view White Paper


A diverse and experienced team supported by a team of experienced advisors.

Our Opinion

Risk Rating: 8/10

Quality Rating: 5/10

Security: Yes

This seems a credible project. Based in the UK and formed in 2018 it is entering a highly lucrative space with a novel approach. Providing affordable effective AI solutions to small businesses lends itself nicely to a blockchain solution. However there are a few downsides to this project. Firstly it is raising money through the sale of a utility token to fund the development of the platform. The token is also being marked as an investment, ‘The price of our tokens will keep rising as a reflection of demand for AI services, their solutions, and computing power.’ This is a high risk strategy when they are targeting both UK and US investors. In addition to this concern we note that 50% of the tokens are being gifted to management, advisors and others. That is far too high in our opinion. Whilst the project offers much upside these two factors makes this ICO one to probably avoid.

PointPay (PXP)

Offer Price: 1 PXP = 0.10 USD

Target: $30m

Type: ICO

Status: Open

Restrictions: Cuba, Iran, Lebanon, Syria, Libya, Sudan, Somalia, North Korea and Yemen


PointPay is a fintech company which has been operating since 2018. PointPay Team has created an all-in-one cryptocurrency ecosystem of 10 fully functional products. PointPay disrupts the regular banking system with its innovative approach targeted to crypto mass-adoption. The one-stop platform offers a full range of financial services within the PointPay Blockchain-based Bank enabling clients to open crypto checking and crypto savings accounts in the most popular cryptocurrencies (Bitcoin, Ethereum, Ripple, Litecoin, etc) and stable coins (USDT, USDC, DAI, etc.), and earn interest with daily accruals.

With PointPay Bank PointPay customers can issue invoices, send funds via email address and take out a crypto loan under the collateral of some crypto either on the website or mobile app. For those who would like to join the crypto market, PointPay offers the purchase of Bitcoin and Ethereum with debit and credit cards, SEPA, Samsung Pay and Apple Pay through PointPay Payment System with more than 40 fiat currencies with global processing coverage. PointPay uses military-grade encryption hence the storage of funds is completely secure with PointPay Crypto Wallet. PointPay customers can order VISA crypto debit cards and instantly convert their crypto to fiat and spend it in more than 25 million outlets worldwide. Just one account is needed to start using all the PointPay products.

Click to view White Paper


An experienced and accomplished team who have already built an impressive platform and a thriving community. See the full team here.

Our Opinion

Risk Rating: 4/10

Quality Rating: 7/10

Security: Likely

The risk of investing in this project is far lower than many we have seen because their platform is already live and performing. They have also built a thriving community of users and supporters which is one of the biggest challenges of any new project. Those factors alone make this an ICO worth serious consideration. The only downside is that a proportion of the money is going into development which could cause a regulatory problem down the road. Potential investors should way up this risk against the upside potential.

Fractal (FCL)

Offer Price: 1 FCL = 0.10 USD

Target: N/A

Type: ICO

Status: Open

Restrictions: None


The Fractal Protocol offers rewards to users for sharing and verifying their data. Through innovative user incentives, the Protocol facilitates users to monetize their data for financial gains whilst ensuring maximum privacy and security to their information. The Protocol also captures staking opportunities for users to maximize their reward potential in exchange for attested data.

The Fractal Protocol addresses power imbalances in the current landscape by establishing data commons, democratizing the access and availability of data. Publishers can leverage valuable and verified user data to win higher bids for ads at auctions. Publishers can access their attested data sets to effectively monetize their traffic and customize ads based on the target audience.

The Protocol offers a more strategic approach for advertisers to reach their target audience. By leveraging advanced technological tools, the Protocol facilitates performance-driven engagement to advertisers campaigns. The Protocol ensures transparency and provides resistance towards ad-fraud by leveraging blockchain technology.

Click to view White Paper


A capable experienced project and advisory team. View the full team here

Our Opinion

Risk Rating: 8/10

Quality Rating: 4/10

Security: Not Known

The world of data privacy is a hot potato. Fractal seems to have devised a solution in order to monitize the problem benefiting all parties in the process by encouraging the sharing of data through rewards. This solution isn’t the only game in town and there is not sufficient information on this project to get too excited. This is one to keep an eye once it lists on an exchange.


Buying tokens through an ICO is similar to buying shares through an IPO. You have the advantage of getting in on the ground floor of a promising new platform. The problem however is the majority of these ICOs are funding startup projects most of which will fail. It would be wise to assume that 9 out of 10 ICO projects will fail in time. However it is not all doom and gloom. We can’t forget that 1 out of 10 ICOs could well end up being the next Ethereum.

It is essential however when participating in this market that you do your own due diligence. If something doesn’t look or smell right avoid it. Here are a few red flags to watch out for:

  • Avoid ICOs where the management team is not named.
  • Avoid ICOs where the project team awards itself an excessive percentage of the total supply of coins and where these are awarded at the outset rather than vesting over time.
  • Avoid cryptocurrencies that possess the qualities of a security.

Also remember that when investing through an ICO you are taking an additional risk that the token will not achieve a listing on an exchange, or at least a decent one. The quality of the exchange matters. Consider if you are comfortable with Uniswap being the only game in town when it comes time to cash out. Finally, always compare the token you are buying with similar coins trading in the market. Ask yourself whether you could buy a similar cryptocurrency through the market at a far cheaper price.

The above four projects are only meant as a guide to some of the live projects out there right now. They are not a recommendation. That being said PayPoint does look one of the better ICOs and is worth further investigation.

We believe that ICOs have been sorely neglected as a source of investment opportunities. In our opinion now is a perfect time to relook at the ICO whilst valuations remain realistic compared to the overheated prices in the market. Bear in mind though, the ICO is by far the riskiest in the crypto world — and that is saying something.

No Financial Advice

This article does not constitute financial advice in any way. Always do your own research and never invest more than you can afford to lose. The article should be treated as supplementary information to add to your existing knowledge.