The longest running Initial Coin Offering (ICO) in history is still running nearly a year after they raised some 650,000 eth in around five days, then continued to raise more and more in the past 11 months.
Their smart contract shows they currently have around one million eth, but they have been selling and selling some of the raised eth throughout the ICO.
Their latest sale, or at least movement of their eth to Bitfinex crypto exchange, is for ~200,000 eth, currently worth some $150 million.
Bitfinex does block trading, or Over the Counter (OTC) trading, so it might not directly affect the price, but indirectly it might affect overall supply and demand.
Where these millions go to is unclear, nor do we know what they’ll do with so much money, but a more controversial ICO this space has not seen.
The above image is an old allegation or suggestion that it could be what one could do in the EOS position. Some have made even stronger allegations of outright money laundering.
“Our CFO and a President are in NYC now speaking with firms that will manage an internal inspection of books to provide public comfort that no recycling is going on; existing firms require a lot of understanding of the space before they can agree to an blockchain engagement, so this is a time consuming endeavour.”
Considering SEC has claimed jurisdiction over these types of ICOs, NYC does not sound like the best place to be. Their first task, however, is to address the public court, and on that we are still awaiting an audit.
There are suggestions such audit will be provided after the token sale ends, with one fact in their favor being that the amount of eth they have raised has grown.
The only way this would work, therefore, would be to use the raised eth to get more tokens which then they sell for eth, and so send that new eth for more tokens in a loop, so growing their amount of eth while affecting the price of EOS mainly negatively.
EOS, however, has shot up to a market cap of $15 billion while still having no running product. That’s expected to come in the next days or weeks, just as the ICO finishes.
As far as we understand, the project has no real innovation. Their main difference is they have delegated staking, which means holders elect 21 representatives who then have considerable say on how the network runs but are subject to being voted out.
How that voting or voting out happens exactly is unclear. The main method so far has been through manual elections by campaigns online, including from Bitfinex which is running to be a representative.
The EOS ICO begun at the height of the summer 2017 craze, when projects were raising hundreds of millions, some in minutes.
The way SEC did so does leave much to be desired, as does their direct application of a discriminatory century old law without modification to take into account the very real differences between tokens and other investment contracts.
But SEC’s idea behind it, and indeed the law’s general idea behind it, isn’t without merit. For ICOs that raise say $15 million or even up to $20 million (which should have been all ICOs in a capped manner) you could say the amounts are small so it does not matter even if they are lost. Therefore there should be an exception, as there is in crowdfunding, except for general contract law in regards to fraud and related aspects.
For ICOs above that amount, however, there needs to be some responsibility. They should provide figures, preferably even an audit of their expertise or background, as well as quarterly reports both financial and regarding progress, until the network launches and is up and running in a finalized form.
For ICOs like EOS, or other ICOs which raise hundreds of millions or even a billion, arguably all of the current requirements should apply and continue to apply until the network is running in a finalized form.
That’s because obviously it is a lot of money at those levels, and until the network is up and running then people are handing over money in return for only a promise, so there needs to be a way to keep them to that promise.
The DAO had quite an innovative way of doing so without involving difficult to enforce legal processes. There, instead of handing over money to someone, you’d give the money to a smart contract that has certain rules which say the money can only move if x holders approve it.
That very innovative idea was however ditched, perhaps pre-maturly. Now SEC has said the DAO itself is a security, but we think that’s nonsense because the DAO is a smart contract.
As such, anyone can code it and put it out there without needing to even reveal their identity, as in effect it would be a protocol or platform for individuals to decide how their funds should be spend, creating a decentralized venture capital fund.
Whether that idea will be brought back remains to be seen, but as long as people are handing over money without retaining any further control in return for only a promise, then certain rules are needed for fundraisings above say $20 million.
Whether those rules are hard law or more soft approaches through a non-governing body in partnership with regulators will probably depend on jurisdiction.
France is choosing the latter, while America is sticking to their discriminatory law which injustly makes an exception for the rich and banks, rather than making an exception based on the amount raised.