Heavily hyped ICO implodes after just 3 months, destroying $50 million in cryptocurrency capital

Monday, October 23, 2017 by

Crypto-currency startup Tezos is encountering some headwinds despite raising $232 million in July through an initial coin offering (ICO).

In a blog post dated October 18, founders Arthur and Kathleen Breitman revealed that progress has stalled for several reasons, including delays in hiring engineers. They also outlined a dispute with the head of the Tezos Foundation, an independent nonprofit entity based in Switzerland which oversees the Tezos “ecosystem,” including providing financial controls.

The Breitmans accused foundation president Johann Gevers of allegedly engaging in self-dealing and are attempting to remove him from his position. Gevers has denied the allegations and has refused to step down. A legal struggle is likely on the horizon. Through a separate company, the Breitmans own the Tezos source code and other related intellectual property. The original plan is for the couple to eventually sell their company to the foundation for about $20 million.

The couple also indicated in the blog message that they anticipate a February 2018 launch date for the Tezos network.

Bloomberg Technology reports that the management dispute and slow progress in the network’s development has apparently led to ripple effects for what is said to be the world’s largest ICO.

Derivatives on Tezos tokens fell as much as 31 percent, according to exchange HitBTC. On BitMEX, December futures on the tokens plunged 58 percent as traders unwound bets the project would be launched before the end of the year. The actual tokens have yet to be created.

According to ZeroHedge, the Tezo difficulties highlight some issues with digital currencies and the like, which are generally unregulated.

Tezos’s struggles underscore the biggest flaw in the ICO market: Investors keep throwing capital at companies hoping to luck into the next bitcoin, even though most companies don’t have a working product and many have relied on “white papers” fleshing out their ideas to market their tokens, a strategy that has been surprisingly (or perhaps unsurprisingly) successful.

The Wall Street Journal noted that ICOs can have some shortcomings, such as “untested management, opaque structures and little transparency into what anyone involved wants to do with the huge sums they are raising.”

So far this year, more than $2 billion has been invested in trendy ICOs.

Earlier this year, Natural News found editor Mike Adams, the Health Ranger, who is pro-crypto-currency, warned that the  bitcoin speculative bubble is headed for a collapse, and set forth his reasons, in the form of questions, for taking that position. He also likened it, to some degree, to what happened with the the dot-com bubble and the subprime mortgage debacle. (Related: Read more about bitcoin at Liberty.news.)

Sources include:

Medium.com

Bloomberg.com

ZeroHedge.com

WSJ.com




Comments

comments powered by Disqus

×
Please like our Facebook Page
Show us your support by liking our page!
Close This Box