HDCoin ICO Debriefing
What happened? What we learnt…
HD Group is a New Zealand company and we’ve been in the business technology space for over a decade. Launching HDCoin was a roller coaster ride. Our team of six spent almost eight months developing the concept and the platform. We believed we had a winning formula. HDCoin was not just another token ICO based on an idea, it was ‘crypto-equity’ based on a 10% stake in the HD Group (Similar to an STO — Security Token).
The idea was straight forward. HDCoin holders would own 10% of the companies in the HD Group. The token would be listed on ICOEx, our digital asset ‘crypto-equity’ trading platform. Dividends from our HD Group profits would be used to buyback and burn the tokens overtime at the market price. The idea gained interest from investors and orders for tokens were coming in.
HDCoin tokens were secured to real shares in the companies and we had to navigate a complicated legal and financial landscape. We invested a lot of time and money to develop the legal framework. We had a series of consultations with the Financial Market Authority of New Zealand. In the end, we decided to pause the token sale and refund investors a day after opening the offer.
When we assessed the scenario, we decided not to go ahead with HDCoin.
Our team has amassed technical know-how, legal expertise and an insider’s perspective the ICO industry.
Along the way, we learnt a few things that we’d like to share with you.
Aggressive Marketing: A few months before HDCoin launched, Facebook announced an ICO ban. Google followed suit and so did most large online advertising platforms. We took it in our stride and decided we would make the most of other available options, but what we encountered took us by surprise — swarms of aggressive crypto marketing trolls. Self-proclaimed ‘crypto experts’, best-selling authors and YouTube channel owners invaded our mailboxes hourly and repeatedly messaged our Telegram channel. The ‘marketing’ continued even after we paused the ICO and some are still pitching their special offers even today…
The range of ‘marketing’ services out there is enough to hoodwink any ICO investor. These ‘marketers’ create echo chambers and promote their favored narratives to communities. A+ ICO ratings and ‘independent reviews’ were offered to us for a fee. ‘Advisors’ claiming to have raised millions in several ICOs were willing to lend their names to HDCoin in exchange for a payment. Exchanges approached us but just like the ‘advisors’, they wanted big fees upfront and promised large returns by listing the token. YouTube channel hosts offered to review the ICO and pump the token to their subscribers. Some went on to troll Ben on Telegram and Email asking for an instant payments.
Networking with the whales: An ICO sell-out is not always what it seems. ICO holders would have us believe that their tokens sold off as soon as the sale opened. The truth is, many companies and startups raise funds way before the ICO goes live to create the ‘fear of missing out’ (FOMO) hype when they open the public sale. That’s where they pitch their ideas to ‘whales’ (big investors) and pre-sell their tokens. Once these backroom deals are closed, the rest of the tokens are made available for public sale. That’s how the sell out is orchestrated!
Hence, the success of an ICO depends on your network and your ability to convince the whales to float the pre-sale capital and hype the market. In exchange, they are offered tokens at a discounted rate. If the ICO sells out and gets listed on exchanges, the whales can liquidate their position and get out with a large profit.
Regulatory environment: A recent review of 1,450 ICOs by the Wall Street Journal has flagged 271 of them as questionable. Some have plagiarized investor documents, fake executive teams or promises of guaranteed profits. Yet, investors have poured over $1 billion into these ICOs and some are still raising funds today.
Investors often bear the brunt of it. They have so far claimed losses of up to $273 million in these fraudulent projects. Sometimes, you can’t tell the difference by just reading a whitepaper or reviewing the team and the products they’re offering. We need mechanisms for fair-play and safeguarding investor’s interests.
Business as usual: Our ICO may have been a temporary blip but we are going ahead with business as usual. The company is doing well and we have set aside budgets for other projects. Later this year, we will be launching HD Cloud Services.
Our SaaS accounting platform is scheduled for launch in 2019.
We are also working on expanding our broadband subscriber base.
As of now, we don’t have plans to relaunch HDCoin. ICOEx, our proposed digital asset trading platform, is also a decision for the future.
Our secure platform: The highlight of our ICO was the fabulous platform we built in-house. Not only was it secure, it also functioned smoothly. The payment gateway worked well, crypto transactions were processed on time and tokens generated as per schedule.
In the process of designing, testing and building this system, we became blockchain experts in our own right. We’re now extending parts of this technology to other applications. For instance, we will be using the payment gateway to accept crypto payments for our products and services in the future.
We are using our new blockchain expertise to integrate it into our businesses and looking at other ways to incorporate and customize blockchain technologies. If you’re exploring or planning such a venture, you’re welcome to chat with us.
You can contact Ben via LinkedIn:
Thanks for reading
HDCoin Team — signing off!