According to analysis carried out by ICORating for Business Insider, multimillion-dollar crypto projects are being “intentionally non-transparent”, after conducting their ICOs and distributing their cryptocurrencies.
Per the report, created by the ICO investment analysis firm, various projects purposefully keep investors in the dark. Researchers looked at the progress of the top 50 ICOs from the first half of 2017. Combined, these raised a total of $887 million, with the biggest one, Bancor, raking in $153 million.
Regarding their transparency, ICORating said in its report:
“The projects reviewed have not publicly revealed how they are spending the funds they have raised. To a certain extent, this is an issue for the whole market, and we are expecting changes in this field.”
TokenData reveals that 435 projects raised $5.6 billion last year. Alarmingly, the ICO analysis firm found that many of them deleted their whitepapers and roadmaps without telling users about it, or offering any explanation.
ICORating’s CMO, John Slyusarev, argued that the key problem for the post-ICO market is lack of transparency. Per his words, if a project takes down its whitepaper and doesn’t inform investors, it might mean its initial deadlines were unrealistic.
He added that investors should demand reasons as to why whitepapers are taken offline. Per ICORating, 13 of the monitored projects removed the version of the whitepaper presented on their ICOs from their websites. The firm declined to name said projects.
The problem with these projects, the report notes, “originates with unrealistic market propositions made to attract investors’ money instead of focusing on long-term success.” Software development is a lengthy process, but some projects promise fast timelines.
Per Slyusarev, if a project can’t come up with an alpha version of its product within a year, investors should pay attention and demand to know reasons.”
Crypto projects with no product see higher returns
ICORating further found that crypto projects with no products seemingly give investors better returns. According to the firm, less than 20 percent of analyzed projects launched full projects, while 29 had some sort of demo version. 11 have no product at all.
Per the report, crypto projects often see their coins get pumped by faith in the project and favorable media coverage, instead of by product development. It notes that investors should rely on third-party evaluations, an instrument that’s currently missing on the market.
Concluding the report, Slyusarev said:
“For ICO startups it is crucial to remain transparent and offer progress reports whatever the situation. Honesty is the best policy, especially when your token is traded on exchanges.