This year 2018 has been even bigger for many ICO that had collected an investment many times over the ones from 2017. Although many of them are very promising and have a great potential, many ICOs haven’t done the due diligence of protecting investors against insider trading and breaking the promises given in their own whitepapers.

A report from the University of Pennsylvania Law School published on July17 named “Coin-Operated Capitalism” had revealed the truth of the matter when it comes to expectation that investors have about ICOs they put their personal finances in and the actual real situation in the ICO projects them selves. The four professors that have given their time in making this report see the light of the day have found many basic behavioral inconsistencies in a great number of ICO projects.

The study starts with the staggering comment that “inquiry reveals that many ICOs failed even to promise that they would protect investors against insider self-dealing. Fewer still manifested such contracts in code.” And the research paper continues:

“Surprisingly, in a community known for espousing a technolibertarian belief in the power of ‘trustless trust’ build with carefully designed code, a significant fraction of issuers retained centralized control through previously undisclosed code permitting modification of entities governing structures.”

Mixed reactions regarding the most recent scandals that have striked some of the most successful ICOs from 2017 among the public have been a main theme in almost every forum and social media outlet discussion.


For example we have Bancor which had executed one of the most lucrative ICO sales at that time in July 2017 collecting 153 million dollars of investors money in just three hours, now got hacked earlier this month for a damaging amount of 12 million dollars worth of crypto coins which started a fierce debate and fulled criticism for its decentralization and claims of fairness in governance.

In their study paper the professors from the University of Pennsylvania Law School have used Polybius, the Estonian financial institution as a practical example of a whitepaper promises made and no real progress delivered after the token sale.

Polybius, as the research suggests have raised 31 million dollars worth of investment through their ICO in June 2017 and in their whitepaper have stated “several claims that would lead us to expect certain features directly coded into tokens or other smart contracts,” and countinue:

“Beyond ERC-20 compliance and the presence of a modification feature, we did not verify that any of these features are present, largely because Polybius’s coded governance exists in bytecode (the Ethereum machine language). Without spending a large sum of money purchasing the time and know-how of a very motivated and talented reverse engineer, an investor would be restricted to relying on vernacular promises.”

On the other hand many industry leaders have continued to support ICOs as a good fundraising model and numbering the benefits over the traditional financial models like the statement from Changpeng Zhao the Binance CEO where he says that “raising money through ICOs is about 100 times easier than through traditional VCs, if not more.”



  1. I’m not sure Bancor is the best example. The hack itself didn’t compromise any user funds and reserves were immediately replenished. They are also leading the way in implementing blockchain communities in third world countries such as Kenya. There are a lot of scam ICO- Bancor is not one of them.