Beware the Paid-for ICO Content Pump
Anyone interested in an Initial Coin Offering (ICO) will want the utmost assurance that the scheme is a secure and sustainable investment. ICO investors conduct do-it-yourself research on coin offerings without any guidance from a regulatory framework. ICO investors also do not have anything like the same levels of protection as those in conventional asset classes, such as stocks and bonds. A crackdown on ICO advertising — which has witnessed Bing, Google and Facebook all ban crypto ads — has left many blockchain startups seeking editorial coverage in media outlets to promote their coin offerings.
The buzz around ICOs has created a gold rush mentality among the more unscrupulous outfits operating at the fringes of the industry. A belief that he who shouts loudest wins — thereby attracting the biggest pool of investors — is a worrying development. Competition in the burgeoning ICO space is fierce. According to data collected in April by CoinDesk, ICOs raised $6.3 billion in the first three months of 2018; that’s 118 percent more than in 2017.
A powerful channel for promoting an ICO is via guest content in the blockchain and crypto media. This can take the form of a thought leadership piece. Still, prospective investors should check if the content has been published based on its own merits for providing insight into the latest industry trends, rather than being just a paid-for plug to pump an ICO. Anyone who blindly believes that a blockchain startup is legitimate on the basis of such editorial content is putting their capital at risk.
Alethena is conducting research into the burgeoning market for paid-for content in the blockchain and crypto media. Our investigators are attempting to solicit thought leadership articles and opinion pieces at supposedly reputable media outlets.
Alarmingly, we found that some online publications have an ask-no-questions policy and will publish a tailor-made ICO plug for the price of 20 Ethereum tokens. Another prominent crypto news portal demanded a fee of $4,500 for a Skype interview.
Worryingly, these paid-for content pieces often do not appear as advertorials. Unwitting readers can be left in the dark and duped into believing that the blockchain startup is providing informed thought leadership commentary. As part of our mission to bring unprecedented levels of transparency and trust to the ICO market, Alethena will expose malicious and fraudulent practices in ICO advertising. The communication channels currently used to promote ICOs are in many ways just as unregulated as the ICO market itself.
There are numerous ways to pay for media coverage in ways that lack transparency and are in fact dishonest.
This often takes the form of articles and investment recommendations supposedly offering neutral and intrinsic advice when such content is little more than paid-for advertising.
The integrity of reporting and thought leadership content is essential for crypto investing to evolve into a trusted, mainstream investment class. Without openness and transparency in content distributed via the blockchain and crypto media there is the risk of trust evaporating in the underlying technology itself.
Our investigation forms part of a mission to shed the light of transparency on the ICO fundraising process. In a sector that is, sadly, still being targeted by scam artists and fraudsters, we believe the mass adoption and participation in a truly independent ratings service is an important milestone on the path towards greater levels of transparency. It is Alethena’s belief that we, as a community, need to grow up and refrain from unscrupulous practices. We will publish the results of our findings and expose the distribution of dubious and dishonest content.
Alethena is the first swiss blockchain-asset rating that is 100% independent, transparent and neutral. Visit www.alethena.com for more information.
