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Despite Regulatory Hurdles, ICOs Raise $1.2 Billion in January

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January was one of the strongest months yet for the bustling world of initial coin offerings (ICOs), as billions poured into the market in spite of growing regulatory scrutiny in places like China and the United States.

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ICOs by the Numbers

Startups in January raised $1.18 billion via ICO crowdfunding campaigns, according to data provider ICOData. The total capital raise for the month was superseded only by the December tally, which came in at a whopping $1.67 billion.

So far in February, $192 million has poured into coin offerings, bringing the yearly total to $1.38 billion spread out across 176 projects.

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The ICO market is coming off a record-breaking year, with more than $6 billion in funding raised. With Telegram set to launch an ICO, 2018 could be the market’s biggest year yet. The hugely popular messaging app is planning to generate $2 billion through public and private sales, according to sources familiar with the matter.

Even with record amounts flowing into the market, many companies are struggling to reach their target funding amount. A massive influx of projects combined with greater investor scrutiny have made the market much more competitive than it was even six months ago.

There are currently more than 1,500 cryptocurrencies in circulation, with many more planned in the coming weeks. Outside of the top 200, few coins are trading for more than a dollar.

Regulation and the Way Forward

The January feat is even more impressive considering the growing number of ICOs barring U.S. citizens and permanent residents from participating. Although ICOs are no illegal in the United States, federal regulators are keeping a close eye on the market for signs of securities violations. The Securities and Exchange Commission (SEC) – the regulator in question – does not care if a project labels its token a “utility” token; if it provides the same function of a security, it will be deemed such.

That’s one of the core messages SEC Chairman Jay Clayton will deliver on Tuesday in a prepared testimony before the Senate Banking Committee.

Testifying before lawmakers, Clayton will insist that:

“Tokens and offerings that incorporate features and marketing efforts that emphasize the potential for profits based on the entrepreneurial or managerial efforts of others continue to
contain the hallmarks of a security under U.S. law.”

Many startups are simply foregoing the American market entirely to ensure they don’t unknowingly violate the SEC’s stern guidelines, as was the cast last summer when The DAO was deemed to be a security token.

ICOs have been illegal in China since September, but that hasn’t stopped keen investors from participating. Now, Beijing’s so-called “Great Firewall of China” is ratcheting up efforts to block access to foreign services.

Fortune recently quoted a central bank-affiliated newspaper in stating, “Overseas transactions and regulatory evasion have resumed.”

The same source indicated that the People’s Bank of China (PBOC) will “tighten regulations” on citizens participating in overseas cryptocurrency markets, including ICOs.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 165 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Iran Becomes the Latest Country to Consider State-Backed Cryptocurrency

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The Islamic Republic of Iran is reportedly considering a new state-run cryptocurrency not unlike the kind proposed by Russia, Estonia and Venezuela. The news comes as more nations explore cryptocurrency from the perspective of regulation, technology and government involvement.

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Iranian Cryptocurrency?

According to technology minister Mohammed-Javad Azari Jahromi, Iran is exploring a new state-backed cryptocurrency following high-level meetings with the country’s central bank. News sources reported that Iranian officials have agreed to implement a new digital currency project based on cloud technology.

“In a meeting with the board of directors of Post Bank on digital currencies based on the blockchain, I … prescribed … measures to implement the country’s first cloud-based digital currency,” Jahromi said in a Wednesday tweet, according to a Bing translation obtained by CNBC.

Last year, the head of Iran’s cyber space authority said he would welcome cryptocurrencies insofar as they were properly regulated.

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That being said, Iran’s position on the matter isn’t so cut and dry. A Feb. 21 report that appeared on the Iran Front Page publication suggested that government authorities are looking to “prevent” the digital currency system from taking root. The article reportedly cites the Central Bank of Iran in describing the digital asset class as “highly unreliable and risky.”

“The wild fluctuations of the digital currencies along with competitive business activities underway via network marketing and pyramid scheme have made the market of these currencies highly unreliable and risky,” the central bank said, according to Iran Front Page.

Governments Weigh In

Speculation about an Iranian cryptocurrency is significant in light of recent developments elsewhere. Earlier tshi week,, Venezuela launched a state-backed cryptocurrency that is pegged to the price of oil. President Nicholas Maduro said the digital asset raised $735 million just one day after launching. Although this may appear to be a success, skeptics say the Maduro regime is merely looking to cover the nation’s burgeoning debt.

Although several nations have been critical of cryptocurrency, they have been keen to explore its underlying technology. Other nations, such as Russia, Estonia and Kazakhstan, have considered launching their own state-backed digital currency system. Recent reports have also established a link between North Korea and cryptocurrency mining, suggesting that the Communist state was using the technology to circumvent harsh sanctions.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 165 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Telegram Officially the World’s Biggest ICO With $850 Million Raised So Far

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It didn’t take long for Telegram to shatter the ICO record for biggest crowdfunding campaign of all time. According to a recent filing, the popular messenger app has already raised $850 million out of an expected $2 billion.

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Telegram ICO Underway

The Tether company disclosed an amount of $850 million in a recent filing with the U.S. Securities and Exchange Commission (SEC). The document indicated that the funds are being used “for the development of the TON Blockchain, the development and maintenance of Telegram Messenger and the other purposes described in the offering materials.”

The $850 million figure matches an earlier estimate of the total amount Tether intends to raise via private sale. Based on the same estimates, the company plans to raise an additional $1.15 billion via public crowdsale. A firm date for the sale is still unknown.

Funding is expected to hep Telegram expand its operations and devote more resources to development. Roughly half a billion dollars will be allocated toward infrastructure costs, such as data center, equipment and bandwidth. An additional $120 million will go toward staff, legal and office fees.

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The amount raised by Telegram easily shatters the ICO record previously set by Tezos, which raised $232 million. The only other coin projects to raise more than $200 million are Filecoin and Bancor.

ICOs Getting a Bad Rap

Initial coin offerings have received criticism from those who feel the crowdfunding model is a quick way for businesses to cover their bills. At their worst, ICOs feed on investor appetite without actually providing much of a business case. The tokens themselves become speculative investments, with the “utility” aspect dependent entirely on user adoption.

By offering up an ICO, Telegram has opened itself up to similar criticism. Although the company is an established brand with hundreds of millions of active users, it is struggling with high operating costs and an uncertain financial future.

To date, the details surrounding the Telegram ICO have come from third-party sources, with the actual team failing to provide much information.

Billions of dollars flowed into ICO projects last year; depending on who you ask, that trend intensified in 2018. Recent figures from ICOData suggest that startups raised nearly $1.2 billion in January. The same source reported more than $6 billion in total funding last year.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 165 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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CFTC Warns Crypto Investors About Pump-and-Dumps

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Washington’s top commodity regulator has issued a stern warning to investors about cryptocurrency pump-and-dump schemes, which have become more prevalent in the wake of the ICO boom that began last year.

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CFTC Issues Warning

In a strongly worded release, the Commodity Futures Trading Commission (CFTC) on Thursday urged investors not to participate in pump-and-dumps, which are classified as a form of security fraud. The regulator said this form of fraud is easier to implement than ever before, with mobile chat groups and internet message boards becoming the go-to method for disseminating false or misleading statements about a particular asset.

“The same basic fraud is now occurring using little known virtual currencies and digital coins or tokens, but thanks to mobile messaging apps and Internet message boards, today’s pump-and-dumpers don’t need a boiler room, they organize anonymously and hype the currencies and tokens using social media,” the CFTC said.

The regulator added the following:

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“Some pump and dumps use false news reports, typically about a famous high-tech business leader or investor who plans to pour millions of dollars into a small, lesser known virtual currency or coin. Other fake news stories have featured major retailers, banks, or credit card companies, announcing plans to partner with one virtual currency or another.”

Lesser Known Coins the Target

In the world of cryptocurrency, pump-and-dumpers often target lesser known coins that can be bought for pennies. The hype machine then goes to work convincing speculators to enter trades as quickly as possible. In a market that added 3,300% in the span of a year, convincing the masses that it’s now-or-never is fairly easy.

Although it’s not always easy distinguishing which cryptocurrencies have been artificially inflated by fake stories, some possible recent candidates include UBIQ, Golem Dragoncoin, DigiByte and Verge.

Others argue that all cryptocurrencies are pumped and dumped because it’s almost impossible to determine their intrinsic value (if they even have one at all). The author believes this argument conflates true pump-and-dump schemes from the common perception that cryptocurrencies are in a bubble (it’s possible to be in the latter without being a product of the former).

That being said, investors should be especially weary of obscure coins that surge unexpectedly without cause or explanation. Although it may not be an apparent pump-and-dump, it could be a case of excessive speculation.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 165 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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