ICOs Printed $13 Billion Out of Thin Air: BitMEX, TokenAnalyst Research

Colin Muller

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 TokenAnalyst.io 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.”

Early Bitcoiner Donates 50 BTC to Grin, Sparking Satoshi Nakamoto Rumors

The Grin General Fund has recently received an anonymous 50 BTC donations from an early bitcoin adopter, a move that sparked rumors it could’ve been Satoshi Nakamoto.

Grin is a privacy-focused cryptocurrency that aims to empower anyone to transact and save money without fearing external control or oppression. One of its developers, Daniel Lehnberg, recently revealed the project received a 50 BTC donation from an address that stored the coins since they were mined.

A look at the data on the blockchain shows the address mined the 50 BTC back in December of 2010, when block rewards were still of 50 BTC and when the cryptocurrency was worth very little.  The only transactions the address have are the one receiving the coinbase rewards in December 2010, and the donation to Grin this month.

Analyzing the data Litecoin creator Charlie Lee said on Telegram the donation came from Bitcoin’s creator Satoshi Nakamoto. Lee later on clarified his comment was a joke, but rumors started flying, setting the crypto community abuzz.

Lehnberg revealed in his post that he managed to interact briefly with the donor, who chose to remain anonymous. The donor said he wouldn’t judge how the funds, currently worth around $429,240, would be spent and assured him the project was going great and that it “feels like 2009/2010 again.”

The donor reportedly added:

It’s wonderful that we have GRIN now, our motives are not economical! It’s about the technology and the protocol. Please put it to good use for the development of GRIN … We saw your work and your ethics towards the project and your interest free work. This is what we are honouring right now with these donations so that you can work freely on GRIN. Without economic dependencies.

The donor added that hopefully they judged right and “time will tell.” It’s worth pointing out that blockchain data also shows that at the time of the transaction, December of 2010, the number of unique addresses on the Bitcoin network grew from 500 to 600.

One unique address if often associated with one user, although anyone can, of course, create multiple unique addresses. As the donor mentioned it “feels like 2009/2010” wit’s possible they got into Bitcoin the year it was created, 2009.

If so, blockchain data shows the number of unique addresses grew to 100 that year, which could still mean there are 100 potential candidates, one of them being Satoshi Nakamoto himself.

Featured image by André François McKenzie on Unsplash.