Nearly $13 billion may have been “made incredibly easily, with very little work, accountability or transparency,” BitMEX’s research arm concluded in a post yesterday. BitMEX utilized data compiled by on funding of initial coin offerings (ICOs) conducted late 2017 and 2018, in order to understand how the ICO teams themselves handled their raised funds.

BitMEX arrived at the $13 billion figure by calculating how much ICOs originally raised in 2017-18, and then adjusting for how much prices have declined since then. But they are keen to also point out that “there are many inaccuracies and assumptions involved in producing the [TokenAnalyst] data.”

Printing Money?

One of the main upshots of the report was that the ICOs issued themselves a vast amount of their own tokens, in addition to selling their tokens to the public. And by virtue of selling tokens to the public, the tokens that ICOs issued to themselves gained a market value.

In fact, according to the data, not even 20% of the initial raises consisted of funds actually sold to buyers – with the vast majority instead consisting of such self-issued tokens. The sales, typically sold for Ethereum, only had the effect of defining a market price of the projects’ tokens.

BitMEX estimate that ICO teams may still own $5 billion worth of their own tokens – again, with that figure having dropped significantly in the past year – and also may have already profited $1.5 billion by selling proprietary tokens.

Qualifications of the Report

The entire report is qualified, as mentioned above, by the disclaimer that the data are somewhat preliminary, or rough.

For those tokens are still held by ICO teams, BitMEX point out that their liquidity is often very low – meaning their paper market value could quickly change if teams tried to sell any of the tokens.

They also point out that the identification of development teams’ wallets was conducted with machine learning, and that data have not had the human touch of individual inspection. Because of this, BitMEX reckon that parts of the data are “likely to be inaccurate at individual project level.”

Finally, BitMEX did not read every single whitepaper to determine if there was some caveat in the handling of development funding, that they were unaware of.

Arthur Hayes, BitMEX’s outspoken founder and CEO, summarized the entire report with his characteristic glibness by saying “When you create poo poo out of thin air, gravity is a bitch.”