The End of the Initial Coin Offering (ICO): A Significant Water Slide

4 min readSep 17, 2021

The cryptocurrency’s popularity is still going strong. The internet is currently buzzing with digital currencies, NFTs, games, and much more in the crypto world! At the same time, the number of so-called “dead coins,” or cryptocurrencies that no longer exist, is rising.

The concept “dead coin” refers to cryptocurrencies that have ceased to exist for various causes. For example, they are being used as a scam, and their website is still down, they have nodes or wallet issues, and much more.

According to Coinopsy, the number of dead coins has increased by 35% yearly to 1,949. It all started in 2016 with the ICO (Initial Coin Offering). An ICO is a sort of money-raising procedure comparable to an Initial Public Offering (IPO) to launch a new cryptocurrency.

On the other hand, the cryptocurrency ecosystem is a little more complicated. One of the most fascinating and confusing aspects is the Initial Coin Offering (ICO) market. It is viewed as a subset of cryptocurrency that aims to disrupt traditional venture capital while also broadening the scope of cryptocurrency beyond Bitcoin.

The Initial Coin Offering is the most popular way for companies to secure the funds needed to launch new cryptocurrencies. ICOs have been the primary source of financing for the majority of blockchain startups since 2016.

However, the market has changed and initial coin offerings are not as attractive anymore. More and more investors prefer security tokens over utility tokens which means that the end of the initial coin offering (ICO) could be near.

The history of ICO

It’s not difficult to guess that a strong year for ICOs would have been 2017. Cryptocurrencies were the conversation of the world and reflected an interest in them in Google searches. March 2018 was by far the most successful month in terms of ICO funding. A total of $2.94 billion was raised.

In 2017, several noteworthy occurrences occurred that raised eyebrows and cast doubt on ICO architecture. In recent years, ICOs have gotten a terrible image; with some big names like Tezos facing a series of lawsuits after internal strife destroyed their development.

According to data collected in 2017, there were 913 projects with token sales in 2017, with 435 (nearly half) of them succeeding and collecting $5.6 billion. 131 (14%) did not make it through this step, while 347 (38%) remained unreported, without any data presented. Some even had their websites deactivated, and all traces of them vanished.

The statistics create a poor image of the ICO ecosystem and spreads a dark cloud over cryptocurrencies and even blockchain technology.

Regulations were also strengthened, giving investors greater security, while project teams gained a stronger foundation for development. As a result, it appears as the ICO vision has died.

Aerial picture of the SEC

The Securities and Exchange Commission (SEC) entered the fray with several significant announcements accusing some ICOs of fraud schemes. After the SEC contacted a Protostar firm, launching an ICO, Protostarr terminated the ICO and returned the money received thus far. The SEC uncovered two additional ICOs for scamming investors the following month; this was only the start of the end for ICOs.

Although cryptocurrencies do not fit neatly into any of the other possible categories of securities, they are classified as investment contracts, a word that is hotly debated.

The basic idea is that if a company wants to obtain money through public trading, it must be more transparent than smaller businesses may reasonably anticipate. Publicly listed firms receive a lot more cash in exchange for their transparency. The SEC’s interest in crypto grew in tandem with the profits generated by ICOs, which was understandable.

The (SEC) launched a completely new ICO that uses lovely SEC exemptions and allows investors to reinvest with new terms.

The SEC was hesitant to become involved in the early days of the Bitcoin network. It was a mysterious corner of the internet that remained undiscovered. The SEC generally ignored it because it posed little risk to investors or didn’t know what to do with it.

The first Bitcoin-related SEC prosecution occurred in 2013. Trendon Shavers was accused of conducting a Ponzi scam that promised enormous profits based on a unique BTC investing technique that didn’t exist, according to the commission. Simultaneously, the regulator issued a broad warning to investors about such virtual currency scams.

Is the Initial Coin Offering (ICO) Dead?

We must keep in mind that initial coin offerings (ICOs), cryptocurrencies, and the whole blockchain industry are still in their infancy. The reforms aimed to improve privacy, accountability, and stability, with more rigid rules to protect investors driving most of it.

Projects will continue to emerge, and they won’t have to worry about this dilemma if they don’t ask for funding. Projects seeking finance, on the other hand, have a difficult road ahead. Numerous financial organizations have begun looking into blockchain technology for private applications more closely.

People have to see if Blockstack can convert its STX tokens into non-securities if Filecoin can deploy its network without running afoul of the SEC, as well as what happens to Telegram and Libra. It’s difficult to imagine a new large enterprise arising and transforming an ICO into widely accepted public money without a significant change in legislation.

Although new crypto projects are still being developed, this isn’t the end of the road. There will be a lot that can be done using the regulations in the ecosystem once it is operating well after a bit of tweaking and expanding.