NextBlock cancels going public, returns funds instead

Initial Coin Offerings (ICOs) have become a very popular, yet unregulated, way of raising funds. Amid other ICO-related controversies, Toronto-based Venture Capitalist Company, NextBlock Global, announced on Sunday that it would be returning funds to investors. The decision was made after Forbes disclosed a scandal last week about the company falsely naming four blockchain stars as its advisors.

In an investor document sent out by a broker via email on October 19th, the company listed eight advisors, including four well-known names in the blockchain landscape: former federal prosecutor, Kathryn Haun; Civic CEO, Vinny Lingham; Dmitry Buterin, and Karen Gifford. All four of them denied being advisers to the company. Vitalik Buterin's father, Dmitry Buterin, confirmed that he had been asked but had declined. The rest stated that they were never even spoken with in this regard.

The firm stated in a press release that it will no longer be going forward with its public listing on the Toronto Stock Exchange. "As a young company, we have stumbled in our efforts to take our company public and we will work hard to rebuild the trust of those we have disappointed. Going forward, we remain as confident and excited as ever about the promise of blockchain technology," NextBlock announced.

NextBlock’s press release had no mention of the allegations against it, simply stating that it is cancelling the planned ICO. The press release explains, “Our first responsibility is to our existing investors and we believe this is the right course of action for all stakeholders. We strive to always act in the best interest of our investors and we are in the process of reaching out to each of them to discuss next steps, including the return of their original investment, timing, and participation in any profits.” How this incident will impact the overall crypto industry will be observable in the coming months.

This is not the only hurdle on ICOs’ path to legitimacy. Another ICO-related controversy taking place right now is that of the blockchain project, Tezos. The company is facing a class action lawsuit for violating US securities law and false advertising. Its relations with investors keep worsening over a dispute with the Tezos Foundation.

Alex Tapscott, NextBlock’s CEO and coauthor of the book “Blockchain Revolution”, is also a well-known name in blockchain. With such a trusted ICO opting to return funds to investors, suspicions concerning the legitimacy of ICOs are on the rise.