How many ICOs are promoting investor returns?
By: Seline Jung
Tags: Investment, ICO, Cryptocurrency, Ethereum, Bitcoin

An earlier version of this post included an error, in which the name and amount raised of a token project called Propy (PRO) appeared above a statement made by a project called Prosperiprop (PROPX). Propy was not meant to be included in this research; Prosperiprop was. Prosperiprop’s amount raised was $200K.

Cease and desist your offering of unregistered securities, the U.S. Securities and Exchange Commission (SEC) last month told Munchee, a San Francisco-based food review app project that had an ICO planned for early November before it was approached by the regulatory body. Munchee was seeking to raise 15 million USD in an offering of tokens (MUN) that would be used to reward users for posting restaurant reviews, selling advertising and promoting in-app purchases.

The order, which can be read in its entirety here, spelled out how Munchee told investors they could expect that efforts of the company and others would lead to an increase in the value of MUN. It also went through a laundry list of other statements Munchee made, like touting its team’s expertise, for example. But the SEC emphasized Munchee’s promises to investors, as well as the company’s outlined plans to create a secondary market for the tokens; these combined would give investors a reasonable belief that their investment in MUN could generate a return.

Munchee’s discussion of investor returns was explicit. But what about projects that don’t make an explicit promise, and yet the expectation of returns is understood? NEO (formerly Antshares) may be a perfect example. We’re not aware of any occasion on which issuers of the NEO token used the word “dividend” to describe its companion token, GAS, issued to NEO holders. A cursory search reveals how consistently commenters are viewing it that way (here and here, for example).

So what does the promise of gains to token buyers look like? We’ve been on the lookout against projects that promise returns for token holders, flagging that as a regulatory risk. In Token Report’s database of ICOs, we have identified 30 projects where the issuers have emphasized some kind of return to investors, whether in the form of dividends or a future increase in the price of the token. These are only the ones we have identified to date.

Not all of these projects are in trouble, per se. Some aren’t trying to escape securities regulation. Others are avoiding the U.S. market. However, other jurisdictions, like Singapore, are promulgating similar regulation. As the SEC noted in its statement, no ICO has yet moved to register its offering in the U.S.

Below is a list of all 30 ICOs along with direct citations from marketing materials that promise some form of return on investment or gains for token holders.

Open ICOs

Proofsuite (PPT)

Amount raised: Open

Promised gains: “All token holders will collect regular automated rewards from all activities in the prediction markets that make up Proof’s AMP implementation as well as a percentage of fees from all crypto-fiat purchases into perpetuity.”

Acumen (AMT)

Amount raised: Open

Promised gains: “All token holders are eligible for obtaining dividends according to their stakes. Any number of tokens (100％) sold at the end of ICO

have right to receive 20％ of company’s profits.”

BmyBit (BMYC)

Status: Open

Promised gains: “You are just three steps away from better profits.”

Algo Land (PLM)

Status: Open

Promised gains: A tweet from Nov. 25 reads, “Yes!!!! After 1.5 years of trading our system “Rapier” has made now 100% profit! If you want to join such profits, it is now the last chance for a very long time to do it (by participating in the ICO).”

Worldcore (WRC)

Status: Open

Promised gains: “Worldcore offers double profit to its participants. In addition to traditional token disposition at the reduced price, the company will pay part of its annual profit to all those who participate in its blockchain project.”

Token Desk (TDS)

Status: Open

Promised gains: “TokenDesk aims spend 12% of our NET profit quarterly for buy back TDS Tokens. It increase TDS Tokens value and liquidity gradually. Tokens, that are bought, will be burned by a smart contract.”

Realisto (REA)

Status: Open

Promised gains: “PayDividend is a smart contract that is not part of the ICO stage but will be deployed later when returns are to be disbursed from the trustee wallet to token holders.”

Upcoming ICOs

NapoleonX (NPX)

Amount raised: Upcoming

Promised gains: “NapoleonX token holders by participating to the selection of the trading bots, will benefit from … a revenue share from the Rental Fees paid by the DAFs for use of the trading bots.”

ARNA Genomics (ARNA)

Amount raised: Upcoming

Promised gains: “All VIP members who become stock holders in a new subsidiary company would enjoy the same rights as other common stock holders, including monetary benefits in the form of dividends or stock sales if and when this new subsidiary company decides to participate in an IPO or M&A.”

WCX (WCX)

Amount raised: Open

Promised gains: “Holding WCXT is hence equivalent to holding a passive income portfolio of diverse digital currencies.”

Edgeless (EDG)

Amount raised: Upcoming

Promised gains: “In our casino, we aim to have 5% of all money wagered be placed as a sports bet with 4% ROI.”

Rhovit (RBIT)

Status: Upcoming

Promised gains: “Once a year an annual “Dividend” of the Rbit Tokens collected in the User Pool will be distributed out to the User community.”

Solar DAO (SDAO)

Amount raised: Upcoming

Promised gains: “It is worth emphasizing that the following should occur naturally: Growth of DAO’s capitalization and consequently, increase in the price of the tokens; and increase in the volume of dividend payouts, which will also contribute to a raise in the price of the tokens.”

Closed ICOs

Project: MobileGo

Ticker: MGO

Amount raised: 53.1M USD

Promised gains: “The more gamers that use the Gamecredits mobile platform the more Gamecredits should be purchased and spent in games. This should create more demand for Gamecredits. In return, the success of the platform should result in a large economy for the gamification of the platform and the usability of MobileGo tokens.”

Electroneum (ETN)

Amount raised: 40M USD

Promised gains: “By slightly increasing the mining return on mobile devices we will dramatically increase the viral number of Electroneum users, which will increase the value of Electroneum for all investors.”

Modum (MOD)

Amount raised: 13.5M USD

Promised gains: “During the annual shareholder meeting, the shareholders decide on a proposal by modum.io’s board regarding the usage of profit in the form of distribution of dividends. Distribution of a dividend on shares shall be announced in the “Tokenholder Information” section of the modum.io website.”

Leverj (LEV)

Amount raised: 13M USD

Promised gains: “Some investors may have a strategy of simply selling

generated [secondary token] FEE as a steady source of income.”

Viberate (VIB)

Amount raised: 10.7M

Promised gains: “Initially we will assure the value growth and liquidity with buybacks. A portion of Viberate’s revenue will be spent on buying Vibe tokens from the market and putting them into the bounty pool for contributors to earn. This way the value of the token will grow along with the size of the service.”

Goldmint (MNT)

Amount raised: 5.3M USD

Promised gains: Token holders have “the ability to receive passive income as market price of GOLD rises.” Additionally, “GoldMint hedges

itself against volatility and guarantees a 100% return of funds in T months

with specified interest rate.”

HydroMiner (H20)

Amount raised: 4.1M

Promised gains: “Each H2O token represents the right to the net profits generated with one watt of energy within our facilities.”

Snovio (SNOV)

Amount raised: 2.1M

Promised gains: As the database actively grows, we will need to conduct a buy back from the exchange at the current market price to further pay our rewards to our contributors for their continuous work. This will always increase tokens’ value.”

Gimli (GIM)

Amount raised: 1.7M USD

Promised gains: “By sharing all revenues with partner streamers, Gimli creates a new way for them to interact with and

monetize their large audience, providing an untapped, stable source of revenue. This in turn leads to viral users adoption as streamers promote Gimli to their fans.”

Digipulse (DGT)

Amount raised: 1.1M USD

Promised gains: “Upon reaching the revenue of more than 1’000 EUR worth of DGPT, 20% of it (DGPT) are allocated to refill the shares of the company on the smart contract and the rest is being distributed to the storage providers and future DGPS holders.”

Value Coin (VC)

Amount raised: 1.1M USD

Promised gains: “Contrary to many ICOs, our main and sole goal is to generate double-digit returns for you. We have no other additional purpose. When you participate in Value Coin, you know you are placing your assets to create a fund that will work daily to make your tokens’ value grow for years to come.”

Wordcoin (WORD)

Amount raised: 0.8M

Promised gains: “Highest ROI Among ICOs 2017!”

Prosperiprop (PROPX)

Amount raised: 0.2M

Promised gains: “Sixty percent of the ProsperiProp declared dividend will be paid out to PROPX token owners.”

Farad (FRD)

Amount raised: Unknown

Promised gains: “The FRD does not pay dividend, however Token holders who wants periodic profit may elect to sell back their FRD to FARAD SPC under the swap back program option. The swap back index is of course higher than the initial swapped index of FRD.”

Prime-Ex Perpetual (PEX)

Amount raised: Unknown

Promised gains: “The Foundation has agreed to waive its right to any distributions of or dividends from Prime-Ex S.A in respect of 80% of its shareholding whilst any PEX are in issue. This waiver ensures that the PEX holders can receive distributions/dividends from Prime Ex S.A.”

Canceled ICOs

Bookira (BKT)

Canceled: Failed to reach sale target and will refund all buyers

Promised gains: “Besides trading [on exchanges], each holder of BKT tokens will be granted with annual dividend payouts.”

Munchee (MUN)

Canceled: Regulatory action

Promised gains: “Munchee could potentially choose to to [sic] burn (take out of circulation) a small fraction of MUN tokens everytime [sic] a restaurant pays Munchee as [sic] advertising fee. This, along with our tiered membership plan could potentially increase the appreciation of the remaining MUN tokens as the total supply in circulation reduces and as users would prefer holding their MUN tokens.”

Token Report is an independent financial information service founded by Galen Moore and Peter Vessenes. Galen is a financial journalist with a background in startups, venture capital and launching news sites. Peter is a co-founder of the Bitcoin Foundation, and launched the first VC-backed Bitcoin company in 2011. He is managing director at New Alchemy, a boutique consulting and investment group based in Seattle, Wash., that is making a pre-seed investment in Token Report.​

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