CEO Jim Preissler Shares His Thoughts & Insights On Why We Should Be More Discerning When Assessing ICOs & Tokens
“The importance of governance
There are a lot of attempts to find technical solutions to try to reduce fraud and provide governance to ICOs - DAICO, “Oracles,” Taps - the list goes on. While there is clearly a need for these, and we applaud the technical solutions to program trust into the governance of the tokens, in many cases this may only address some of the issues.
The ‘get rich quick’ disillusion
One thing does need to change first - the appetite for cheap tokens and fast returns have led buyers of tokens to overlook basic fundamental risks and diligence and become victims to outright frauds, Ponzi schemes, digital counterfeiters and “too good to be true” dubious projects touting impossible returns. Token buyers need to drop this “get rich quick” mentality and look at these opportunities as any other investment that carries risk, and hopefully, reasonable returns. They need to become invested in not only the token, but the governance and responsibilities of being a token holder as well. These issues will become even more paramount once we have more “security” tokens that are registered with relevant regulatory agencies.
Technically safeguarding your contribution
In addition to implementing the technical safeguards as they become available, trade.io also plans to offer other levels of diligence typically found in the traditional investment banking and IPOs. I can’t tell you how many times when I research an ICO and its teams that I find available information that raises giant red flags, yet they never seem to come up. Doing simple online research on the teams you can find management members that had their securities licenses taken away, their firms expelled by regulatory agencies, possible fraud convictions, fake resumes, or other questionable backgrounds. Many of them have now taken the scam to the blockchain to find the next wave of uninformed, unsophisticated, or even gullible victims.
Time to wise up
We need to raise the level of token buyer knowledge and protections. I will write weekly thoughts on ways trade.io is planning on doing this and integrating it directly into our ICO advisory services, synthesizing the best practices from both new blockchain-based methods along with the tried and true due diligence. Please give me your thoughts, and I will provide in detail on our KYC, due diligence, verification, and other potential due diligence plans in subsequent articles. “
