The recent rout suffered by bitcoin and other cryptocurrencies hasn’t dented the popularity of the crypto-fundraising method known as an initial coin offering.
Sales of those digital tokens have raised about $1.66 billion so far this year. That puts the market on pace to top the $6.5 billion raised last year, according to research and data firm Token Report. Coin-offering investors have created some of the best-capitalized startups in incredibly short periods: The $1.5 billion raised by block.one in less than a year is equal to the amount raised by Twitter between 2007 and 2011 across nine separate funding rounds.
Despite their popularity, coin offerings remain contentious as it isn’t clear if some of the sales at some point could be deemed securities offerings by regulators. Also, businesses conducting offerings are often just concepts without a working product or service.
In many cases, the tokens don’t confer any ownership rights in the company selling them. Instead, they offer holders the ability to buy the company’s product or service—if one is ever launched.
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