Two of the largest cryptocurrencies criticize ICOs for lack of regulation

Initial Coin Offerings (ICOs) are a popular yet controversial fundraising tool for startups that sell off cryptocoins in return for cash. Over 200 ICOs have raised more than $3 billion this year. The ICO system has been getting a lot of criticism lately. ICOs are significantly notorious for their lack of regulation and rational free-market economics. Two of the most important names in the cryptocurrency industry recently commented that most of ICOs are fake, as they have no intention to complete the projects they’ve raised funds for.

During the Singapore Fintech Festival this week, Ripple CEO, Brad Garlinghouse, and Ethereum co-founder, Joseph Lubin, both agreed on one thing. They agreed that a significant portion of the ICO market is fraudulent.

According to Lubin, it’s true that most ICOs back high-quality projects, but this doesn’t mean the market is entirely scam-free. He asserted that there are several “copycat projects" that do not aim to deliver any value to their investors. The ConsenSys founder went on to speak in favor of China’s decision to ban ICOs, considering the fact that most of the ICO fraud-related activities were taking place in, or close, to China. “It made a lot of sense for them to pause things a little bit and get a better, deeper understanding of the ecosystem, and scare potential fraud perpetrators,” he said.

Similarly, the CEO of Ripple had almost identical views regarding ICOs. Like Lubin, he also believes in the system’s greatness. Garlinghouse said that things like digital currencies and blockchain technology have contributed a lot to reduce friction and cost, thereby enabling things to happen that were not possible before. He agreed that ICOs lack proper regulation. He was, however, optimistic about the market’s future, saying that many investors are now suing token issuers. His point is proven to a great extent when one considers the lawsuits being faced by organizers of the Tezos ICO right now.

This is not the first time ICOs have been criticized so openly. Many significant personalities, including the former penny-stock broker, Jordan Belfort, have directly called them fraudulent, while countries like China and South Korea have issued complete bans on them. What’s interesting to see is that despite being disapproved of so many times, this unregulated way of crowdfunding is still flourishing.