The University of Pennsylvania law school in its recent report said that most initial coin offerings (ICOs) to provide adequate security against insider trading or stick to their white paper promises
A Recurring Decimal
Its stale news that bad actors have always taken advantage of the largely unregulated nature of the crypto space to conduct scam initial coin offerings.
Now, an academic report from one of the most famous citadels of learning globally has revealed that most ICOs do not work according to their Whitepapers.
The scholars who contributed to the report uncovered a heap of inconsistencies in the behavior of a significant number of projects.
Though 2017 was largely successful for the ICO industry, the crypto-based fundraisers continue to generate mixed reactions from investors in the crypto space.
In recent times quite many ICO projects have collapsed on their own, with regulators hammering down a vast array of projects, due to illegal operations.
Just recently, the Bancor ICO project which succeeded in raising $153 million within hours of going live, lost $12 million to hackers, with investors becoming quite skeptical about its decentralization and fair governance claims.
“Surprisingly, in a community known for espousing a technolibertarian belief in the power of ‘trustless trust’ built with carefully designed code, a significant fraction of issuers retained centralized control through previously undisclosed code permitting modification of the entities’ governing structures,” the report stated.
Of a truth, initial coin offerings remain a viable means of raising funds by startups, the sad fact, however, is that the nascent space is still very far from becoming a well-organized industry.
With each passing day, a new ICO projects spring up, claiming to offer users heaven on earth, to get hold of investors hard earned money and disappear after a few months.
The academic report also pointed out some shortcomings of the Polybius project which raised $31 million last year.
“Beyond ERC-20 compliance and the presence of a modification feature, we did not verify that any of these features are present, largely because Polybius’s coded governance exists in bytecode,” the team stated, adding ” Without spending a large sum of money purchasing the time and know-how of a very motivated and talented reverse engineer, an investor would b restricted to relying on vernacular promises.”