The modern successor of the popular Initial Coin Offerings (ICOs), the Initial Exchange Offerings (IEOs), is, according to experts quoted by Bloomberg, an even worse alternative to initial investment in cryptoprojects than ICOs.
The IEO, an acronym for the initial coin exchange at a particular exchange office, has become very popular at the beginning of this year thanks to successful token sales through Binance, specifically the Binance Launchpad project. Other leading stock exchanges, which began to offer their own form of IEO, also responded quickly to Binance's activity.
IEO on the stock exchanges has become popular due to the simplicity of the investment, and undoubtedly the stock exchange guarantee that every project that offers such a pre-sale has been “misspelled”. As a result, many investors believe that the tokens offered in such pre-sales relate to really good projects with a solid future (which is, in fact, very questionable).
CoinSchedule.com states that only 23 IEOs were implemented in February 2019. $ 180 million was collected.
However, the IEO regulatory status is very unclear - even more dubious than the ICO. Securities Lawyer Zach Fallon, who has addressed the ICO theme with the US Securities and Exchange Commission (SEC), thinks that this model has taken over the worst of the ICO and has made it worse.
In the meantime, Jeff Dorman, a partner and portfolio manager at Arca Funds, has pointed out the paradox that such a pre-sale of new tokens on a particular exchange (eg Binance) is clearly contrary to the decentralized cryptocurreny ethos, but is conveniently ignored when it works.
The IEO is undoubtedly the most profitable for the stock markets themselves, which offer such a pre-sale. For example, Binance already forces potential candidates to hold a larger number of Binance Coin tokens in other Binance Launchpads, otherwise they will certainly not be able to purchase. The more they have, the greater their chances. In addition, the pre-sale is set up so that new tokens must be purchased for Binance Coin (BNB), thereby directly promoting the growth of this cryptocurreny .
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