As the number of ICOs continues to surge, investors are finding that choosing the right ones can be extremely challenging.
As the industry has exploded, so has the number of ICO rating sites set up to assist investors to sift through the plethora of offers. They purport to act in the same way the traditional rating agencies such as Moody’s, Standard & Poor’s and Fitch operate in the capital markets.
In reality it doesn’t quite work like this. Whilst it is normal practise in the capital markets to conduct substantive and critical evaluations when rating a business, ICO rating sites typically operate simplistic scoring systems, which are little more than rudimentary ‘Check Lists’. For example, when assessing a team, the main focus is on nice glossy photos, LinkedIn profiles and social media presence.
As to the project itself, points are awarded for videos, Whitepaper presentation and general social media hype. Clearly ratings are arrived at on the most superficial criteria without serious scrutiny of the quality of the underlying project, its chances of success, its marketing plan, the competitive environment or the feasibility of its financial projections.
And it gets even worse. Whilst not all ICO rating sites are equal, there are no common industry standards or qualifications set for those making the ratings. Many ICOs are rated by only by a couple of people and rarely by more than five. The lack of objectivity is further compromised by the fact that often those ‘volunteering’ ratings are offered free tokens and several leading agencies also act in the capacity of an exchange, intermediary or advertising platform…talk about blatant conflicts of interest! This is simply unacceptable.
How can this possibly be of value to or in the interest of prospective investors?
Quite frankly, ICO rating sites and their so-called rating systems are a serious blight on the industry.
Well, the good news is that it’s all about to change.
Following SEC Chairman Jay Clayton’s announcement, a major shake-up is in the pipeline. As institutional investors increasingly become engaged with genuine Security tokens, rating regulation is bound to follow and will result in a significant clean up. No longer will the industry tolerate the amateurish standards applied to date. This should be welcomed by all who genuinely wish to see this industry evolve, prosper and grow.
Improved investor protection, higher professional standards and objective analysis guidelines are certain to be established, and this can only be positive. Many people have been badly burned with the fall in cryptocurrency prices during 2018 and from participating in failed Utility tokens, often based on spurious ratings.
CryptoMillionsLotto, which is based on a proven, operative model has sought to provide transparent and comprehensive information clearly setting out its business plan, marketing strategy, competitor environment, Team, token features and financial projections including investor returns. All of this has been required for it’s filing under Regulation D 506c with the Securities & Exchange Commission in the US.
Find out more about CryptoMillionsLotto and our ICO at www.cryptomillionslotto.io
Sulim Malook
CEO