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Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag

bloomberg.com

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Re: Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag

#41

Post by ringaroundthetx »

readhn wrote: post #28

Haha. How is this different from last tech bubble high of 2000 where folks were "daytrading" quickly appreciating tech stocks or last real estate cycle high where "everyone" was in and out flipping homes. I say its not any different! Here you have hedgies using early access advantage to buy at a discount and quickly turn around and sell to the "bag holders". (aka retail "know-it-all" bag holders).

It isn't different, people need to validate their beliefs even if that means ignoring or being oblivious to how it is exactly the same as how their favorite markets function

Re: Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag

#42

Post by shallot_router »

psyc wrote: post #18
empath75 wrote: post #8

> Startups often need access to capital to promote ICOs. This should be a huge red flag. If a business is spending the majority of the money from early investors to find more investors, rather than actually developing and marketing their product, that's pretty much a text book pyramid scheme.

A huge proportion of the ICOs I investigate turn out to be pure facade. It's amazing to me just how quickly this con was honed and formalized, but I guess people have always been good at aping when it comes to get-rich-quick bandwagons. The standard ICO consists solely of: 1) A slick website. 2) A well-produced video. 3) A whitepaper that discusses trivially standard blockchain features and goals. No differentiation…

What % of ICOs are seemingly legitimate? I see advertisements for ICOs on reddit and other tech websites all the time, and I have yet to find one that doesn't look incredibly shady.

Re: Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag

#43

Post by JSDave »

nostrademons wrote: post #40
psyc wrote: post #18

Earlier quoted context omitted.

A huge proportion of the ICOs I investigate turn out to be pure facade. It's amazing to me just how quickly this con was honed and formalized, but I guess people have always been good at aping when it comes to get-rich-quick bandwagons. The standard ICO consists solely of: 1) A slick website. 2) A well-produced video. 3) A whitepaper that discusses trivially standard blockchain features and goals. No differentiation…

The brilliant part of it is that it's a double pyramid scheme. The people buying into these ICOs are doing so with Bitcoin or Ethereum that has often appreciated 100x or 1000x from when they bought it. So a company may raise $200M in an ICO, but the investors may've only paid $200K for their Ethereum in the first place. The huge dollar amounts attract more people into the ecosystem, which drives the price of your bas…

>all savings of people who don't invest in cryptocurrencies are worthless, that fear may be driving a lot of the ICO speculation.

There are lots of ways to invest your money that aren't based on the dollar. Futures, real estate, company stocks, metals.

Re: Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag

#44

Post by Ibethewalrus »

shallot_router wrote: post #42
psyc wrote: post #18

Earlier quoted context omitted.

A huge proportion of the ICOs I investigate turn out to be pure facade. It's amazing to me just how quickly this con was honed and formalized, but I guess people have always been good at aping when it comes to get-rich-quick bandwagons. The standard ICO consists solely of: 1) A slick website. 2) A well-produced video. 3) A whitepaper that discusses trivially standard blockchain features and goals. No differentiation…

What % of ICOs are seemingly legitimate? I see advertisements for ICOs on reddit and other tech websites all the time, and I have yet to find one that doesn't look incredibly shady.

Been thinking about that, might as well be zero

Re: Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag

#45

Post by nostrademons »

JSDave wrote: post #43
nostrademons wrote: post #40

Earlier quoted context omitted.

The brilliant part of it is that it's a double pyramid scheme. The people buying into these ICOs are doing so with Bitcoin or Ethereum that has often appreciated 100x or 1000x from when they bought it. So a company may raise $200M in an ICO, but the investors may've only paid $200K for their Ethereum in the first place. The huge dollar amounts attract more people into the ecosystem, which drives the price of your bas…

>all savings of people who don't invest in cryptocurrencies are worthless, that fear may be driving a lot of the ICO speculation. There are lots of ways to invest your money that aren't based on the dollar. Futures, real estate, company stocks, metals.

Sure, and they'll hold their value even in this scenario. But (other than the hedge funds) I suspect many people investing in these ICOs aren't big investors in those, and even among those that are, I doubt they'd like to see their checking account become worthless.

Re: Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag

#46

Post by genericacct »

deadmetheny wrote: post #6

You mean to tell me that investors don't actually want their digital Beanie Babies and are trying to pitch them to suckers after getting them cheap to make money? Colour me shocked. It's like nobody learned anything from the early 2000s.

I am pretty sure a sizable chunk of current digicash "investors" were not even born in 2000. And we know there's one born every minute too..

Re: Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag

#47

Post by kowdermeister »

psyc wrote: post #18
empath75 wrote: post #8

> Startups often need access to capital to promote ICOs. This should be a huge red flag. If a business is spending the majority of the money from early investors to find more investors, rather than actually developing and marketing their product, that's pretty much a text book pyramid scheme.

A huge proportion of the ICOs I investigate turn out to be pure facade. It's amazing to me just how quickly this con was honed and formalized, but I guess people have always been good at aping when it comes to get-rich-quick bandwagons. The standard ICO consists solely of: 1) A slick website. 2) A well-produced video. 3) A whitepaper that discusses trivially standard blockchain features and goals. No differentiation…

I even seen a designer specialized in creating beautiful ICO websites :)

Re: Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag

#49

Post by the_stc »

shallot_router wrote: post #42
psyc wrote: post #18

Earlier quoted context omitted.

A huge proportion of the ICOs I investigate turn out to be pure facade. It's amazing to me just how quickly this con was honed and formalized, but I guess people have always been good at aping when it comes to get-rich-quick bandwagons. The standard ICO consists solely of: 1) A slick website. 2) A well-produced video. 3) A whitepaper that discusses trivially standard blockchain features and goals. No differentiation…

What % of ICOs are seemingly legitimate? I see advertisements for ICOs on reddit and other tech websites all the time, and I have yet to find one that doesn't look incredibly shady.

Not many of them! Even the ones that are sincere, often have terrible ideas. Or purely unworkable ideas or no business model.

It makes it hard for legit people like my startup. We're actually using tech for an end case, not building tech on top of tech for tech's sake.

Re: Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag

#50

Post by the_stc »

EternalData wrote: post #10

Early retail investors in ICOs are not going to be very happy with returns down the line I don't think...meanwhile, hedge funds thrive anywhere there is volatility, and crypto is nothing but volatile.

I had one of our investors write us and say he was really counting on our success to pay some family bills. I told him he should back out, that no investment is a good idea for bills. Much less a startup! Much less an illegally operating startup that depends on cryptocurrency! I'm sure of our model, but damn.
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