Report: ICOs left retail investors in the dark

A Xangle survey analyses investors‘ reflections on their Initial Currency Offering investments between 2017 and autumn 2020.

Report: ICOs left retail investors in the dark


Xangle research found that one-third of retail investors surveyed in the United States felt „cheated“ by Initial Coin Offers (ICOs), or that the projects concealed information from them.

Xangle’s survey interviewed 600 people who invested in an ICO at some point between 2017 and October 2020. The majority (44%) of respondents were between 25 and 44 years old, with more women represented than men, 58%.

Based on this, Xangle suggests that „there is no typical ICO investor,“ although he does not provide more information on his research methodology and choice of respondents.

However, Xangle notes that the retail investors surveyed were not limited to those who entered the early ICO boom. Only 22% of respondents invested for the first time in 2017, while 35% invested for the first time in 2018, 26% in 2019 and 9% in 2020.

Most of the respondents (46.7%) invested a small amount, less than $1,000. Thereafter, a significant proportion of investors (29.2%) invested between $1,001 and $10,000. About 8% invested between $10,001 and $20,000.

Informal ties and word-of-mouth played a disproportionate role in these investors‘ decisions: 45.7% said that friends, family or co-workers were the source of information for the ICO they chose to invest in. After that, media coverage, forums and social media sites were the source of information for 15%, 19.2% and 17.7% of investors, respectively.

Almost 55% of respondents invested in ICO because they were motivated to see a potential return on their investment, 23% because they believed in the idea behind the project, and 17% because they wanted to learn more about the technology behind crypto.

A constant theme in the research is the feeling of investors that they were unable to conduct sufficient research on the project, with almost 56% saying they would invest in an ICO again in the future, but would investigate the offer further. Almost 33% felt that the ICO had intentionally misled them or withheld information. Another 17% responded that they „did not know,“ implying that they did not yet have enough information to assess in retrospect whether the ICO was misleading or fraudulent.

These statistics may explain the fact that with 54%, the majority of respondents believe that ICO operators should be held criminally responsible for projects considered fraudulent.

Of five answers to the question: „What holds cryptomyces?“ three answers referred to information and enforcement issues; 27.5% cited lack of knowledge about what cryptography does and how it works in general; 23.7% cited lack of regulation; and another 14.5% cited lack of transparency in ICO disclosures.

Earlier this year, the Cointelegraph published an article entitled „The Death of the ICO“, pointing to the increased role and impact of US regulators within the token supply space in the years following the initial industry boom in 2017.

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