Concerns are being raised over the “Initial Coin Offering” (ICO) for ICONOMI, a company promising “high profits, not possible in the old economy” using “newly developed financial instruments” that will “drive new investors and fresh capital into decentralised economy”.
The ICO kicked off little over a week ago on the 25th of August and has already raised over $3,000,000 USD worth of funding in various currencies; namely Bitcoin (BTC), Ether (ETH), Lisk (LSK), USD, and EUR.
With a long 26 days remaining, there are those asking if it’s worth investing with so much capital already raised. Many of these concerns arise from the way in which shares are planned to be distributed.
When a deposit is made, the investor is given an estimate on the number of ICN tokens — tokens representing shares in the ICONOMI platform—that they will receive at the end of the ICO. But this estimate falls as more funding is received, as I’ll go into more detail below.
The funds are then locked in escrow and investors may only have their investments returned under the condition that ICONOMI fails to raise at least 2000 BTC worth in funding by the end of the ICO; a target already far surpassed.
There are 100 million ICN tokens in total, and 85 million will be divided amongst the participants of the ICO. The other 15 million are reserved for “early stage marketing and bounties” (2 mil), “advisors” (2 mil), “team” (8 mil), and “reserve for future team” (3 mil).
Thus, the more funds raised, the fewer shares, or “ICN”, participants can expect to receive. However, the 8 million ICN to be split between team members, for example, is unchanging.
ICN Holders Receive Dividends
sickbay, a potential investor on the Bitcointalk.org forum, expressed concern over the possibility of not receiving “any significant dividends ever.” A ICONOMI team member, or PR person, responded with a hypothetical scenario.
“If we manage to make a profit of ~10m per year that would equal to ~200k per week. If we approximate ETH price at 10 USD that would be 20k ETH per week. Which would mean that 5000 ICN tokens will be needed to receive 1 ETH per week.” — ICONOMI
The potential investor also asked a question regarding the ICONOMI fee structure which went unanswered.
Is ICONOMI’s claim of “more initial capital” meaning “greater probability of investment multiplication for investors” realistic?
A few days ago ICONOMI published a post here on Medium celebrating their success in raising the “minimum initial capital of 2000 BTC (approximately 1 million USD) in only 6 days”.
But the ICONOMI team didn’t want to stop there. They rallied potential investors for even greater funding.
“ More initial capital means faster development with more initial functionalities, and a greater entrance barrier to potential competitors. It also means greater attraction to the project and greater probability of investment multiplication for investors.” — ICONOMI
An investor in the ICO named ⓒⓐⓥⓔⓣ commented on the post raising some of his own concerns, as well as some thoughtful suggestions for actions ICONOMI could take to do right by their shareholders.
The comment seemingly fell, at least in part, on deaf ears. No personal response was made to this investor addressing his concerns.
However, ICONOMI published another post a few days later rallying for even greater funding and giving some explanation as to the purported benefits of higher heights.
ICONOMI also reported their unilateral decision to indeed “set the upper limit (cap) for the ICONOMI ICO at 21,000 BTC”, but fail to fully address investors concerns over — as one commenter succinctly put it — a “continued dilution over the next 29 days”.
The question remains: is a 21,000 BTC cap reasonable or will investors be left feeling scorned and regretful of their decision to participate in the ICO?
