Bribery Of Crypto Assets: The Emerging Definition Of Initial Coin Offerings

Posted in Crypto Asset Compliance on May 27, 2024
Bribery Of Crypto Assets

The bribery of crypto assets in relation to ICOs. Initial coin offerings or ICOs are a popular fundraising method used primarily by start-ups wishing to offer products and services, usually related to cryptocurrency and blockchain. Some ICOs have yielded massive returns for investors. Initially, the term ICO was primarily used to refer to a crowd sale organized upon the launch of a new cryptocurrency by a known or identifiable issuer. The coin’s inventors usually pre-mined some coins and offered them to the public through a crowd sale to pay for development costs, which was the case for Ethereum’s ether and Cardano’s Ada, amongst others.

Bribery Of Crypto Assets

Bribery Of Crypto Assets: The Emerging Definition Of Initial Coin Offerings

Today, the term ICO is commonly used by regulatory authorities and cryptocurrency professionals to refer to a process in which businesses, usually start-ups or individuals, issue tokens to the public to raise funds for their projects in exchange for fiat money or other crypto assets. In this evolved meaning, the term ICO is sometimes substituted for ITO, initial token offering, or simply token sale.

For simplification, you can compare ICOs to IPOs. If you haven’t heard this term yet, an IPO is simply an initial public offering and refers to the process of offering shares of a private corporation to the public in a new stock issuance.

These three-letter acronyms, ICO and IPO, aim to raise money from the general public. There are, however, several differences between the two, aside from the instruments issued.

  • Firstly, whereas a successful IPO generally requires the issuing companies to have a particular track record, a successful ICO can be initiated at any stage.
  • Secondly, IPOs typically involve a costly and time-consuming process. ICOs, on the other hand, can be launched through the issuer’s website in a short period and generally do not require multiple actions from traditional intermediaries.
Bribery Of Crypto Assets

An ICO is typically preceded by a so-called white paper, which is available on the issuer’s website. In this white paper, the issuer describes his project, the tokens that will be issued, the technology, and the protocols underlying them.

The issuer will subsequently announce his project to the general public along with the date of the ICO through social media. To subscribe to, hold, and at a later stage – trade tokens, investors need to acquire a “digital wallet.” Such a wallet is also required to store and exchange other crypto assets.

As indicated earlier, the words “initial coin offering” are currently used in a dual context to refer both to coins by means of cryptocurrencies and tokens issued by an identifiable issuer.

Final Thoughts

The cryptocurrency industry’s equivalent of an initial public offering (IPO) is an initial coin offering (ICO). An ICO can be launched by a company looking to raise funds to create a new coin, app, or service. Investors who participate in an initial coin offering will receive a new cryptocurrency token issued by the company. This token may have some utility related to the company’s product or service or it may represent a stake in the company or project.