ICOs Raised 95% Less in January 2019 Than in Their Best Month, Data Shows

Omar Faridi
  • ICOs are not receiving as much capital as they did during the crypto bull market of 2017.
  • However, ICOs are still performing better than what they did January 2017.

Investments in initial coin offerings (ICOs) have dropped by nearly 95% according to data from cryptocurrency analytics firm Coinschedule.

In March 2018, ICOs raised over $5.8 billion, however Coinschedule reported the popular fundraising method attracted only $291 million in total investments during January 2019. Although ICOs have not generated as much capital as they did when blockchain project valuations were a lot higher, Coinschedule pointed out that ICOs still raised over 70% more funds last month than they did in January 2017.

When compared to the time period during which cryptoasset prices hit record-level highs in late 2017 and early 2018, the ICO market has slowed down considerably. Coinschedule’s data shows there were less than 50 ICOs launched in the first week of January 2019. Moreover, the ICO ecosystem received only $6 million in total investments from 424 different public token sales tracked by Coinschedule. Significantly, this is the smallest amount raised by ICOs since 2017.

$1.4 Billion Raised From ICOs In Q4 2018

As CryptoGlobe reported last week, ICOs netted 25% less in funding during Q4 2018 when compared to Q3 of the same year. This, according to data from ICOBench which also revealed in the same crypto market report that there were 594 ICOs completed in Q4 2018. During the previous quarter, 554 ICOs were successfully conducted (as they managed to reach their fundraising target).

Data from ICOBench revealed that $1.4 billion was raised by ICOs in Q4 2018, while Q3 of last year saw public token sales generate $1.8 billion - according to ICOBench.

As covered, a study conducted by Satis Group found that more than 80% of ICOs launched in 2017 were scams. However, the fraudulent token sales only managed to attract 11% of total investments made in ICO projects (during 2017). According to Satis Group’s report (published in July 2018), approximately 70% of the funds raised by ICOs went towards helping legitimate crypto and blockchain-related projects.

Security Token Offerings (STOs) Provide Regulated Investment Options

In December 2018, Jerry Ji Guo, a Chinese-American who previously worked a journalist for the New York Times, was charged for his alleged involvement in a $3.5 million ICO-related scam. Guo is now facing up to 20 years in prison as he was found guilty of orchestrating fraudulent schemes in which he stole large amounts of cryptocurrency from blockchain startups that had employed him as a consultant.

Due to the large number of scams orchestrated under the guise of ICOs and the lack of proper regulations for the crowdfunding method, many companies have introduced security token offerings (STOs). These are regulated token offerings that allow investors to acquire cryptoassets which are tied, or backed by, real-world assets such as stocks, debts, commodities, and real estate.

Overstock CEO Sells Shares in His Company to Invest in Blockchain Projects

Patrick Byrne, the chief executive officer of Overstock.com (OSTK), has recently lashed out at investors who questioned his sale of 900,000 of his ‘founders shares’ in the company. Justifying his move, he revealed he needed the funds to invest in blockchain projects.

According to Business Insider, Byrne recently sent a letter to shareholders after the company’s stock prices plunged over 21% this week to their lowest since 2012, after he revealed he sold 500,000 of his shares earlier this week.

On Friday, the CEO revealed he sold an additional 400,000 shares, meaning he sold over 15% of his stake in the company. Although Overstock’s shares recovered on Friday, May 17, Byrne’s letter to shareholders was notable. In it, he wrote:

I simply had to supplement my nominal salary with stock sales in order to fulfill personal commitments to invest personally in blockchain projects such as Medici Land Governance, along with a need to meet charitable pledges.

The CEO added that he doesn’t plan on giving such an explanation again, justifying that he owes shareholders “staying within the law and not making decisions based on inside information, not explanations of my life and projects outside Overstock.”

He noted that the “unanticipated stir” caused by his sale was unexpected, and added “I had no idea that shareholders would demand explanations of why and how I might want to use my cash derived from my labor and my property to pursue my ends in life.”

Byrne is notably Overstock’s largest shareholder, and noted he told investors a year ago he would be making “significant sales” to fund different projects, including those related to blockchain technologies and, presumably, cryptocurrencies.

In fact, the libertarian sold 775,000 of his shares in September of last year, before this week’s sale. The stock’s price has fallen roughly 90% from its record high in January of 2018, when Overstock was benefitting from its cryptocurrency ventures and accompanying the cryptocurrency market’s performance.

In November of last year, Byrne revealed he had plans to sell Overstock’s retail business and go “all-in” on cryptocurrencies and blockchain technology. The CEO’s plan would see the company focus on its fully-owned subsidiary Medici Ventures, which has been invested in blockchain-related startups, after selling its retail business.

Overstock's price performance over the last two yearsSource: Yahoo Finance

Byrne has notably been battling short sellers targeting Overstock, as the firm competes with the likes of eBay and Amazon. Financial analytics firm S3 Partners has estimated short bets against it stand at $157 million, or 50% of its float. This makes it more targeted by short sellers than 99% of companies in the U.S.

Despite the company’s performance on exchanges, Overstock has since launched its tZERO security trading platform, and was one of the first companies to pay a “portion” of its taxes using bitcoin in Ohio.